Public Sector Banks in India have achieved a remarkable milestone by recording their highest-ever aggregate net profit of ₹1.41 lakh crore in the financial year 2023-24. This landmark achievement reflects the sector's robust turnaround, underpinned by a significant improvement in asset quality.

The Gross Non-Performing Assets ratio steeply declined, dropping to 3.12 per cent in September 2024. Demonstrating continued momentum, they registered a net profit of ₹85,5206,000 crore in the first half of 2024-25.

Read in Hindi: सार्वजनिक क्षेत्र के बैंकों ने कमाए ₹1.41 लाख करोड़, जीएनपीए घटा

In addition to their stellar performance, PSBs have contributed significantly to shareholder returns, paying a total dividend of ₹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.

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 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 addressing stress within the banking system.

A turning point came in 2015 when the Reserve Bank of India initiated the Asset Quality Review. 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 is their Capital Risk Assets Ratio, which rose by 3983 basis points to 15.43 per cent in September 2024, up from 11.45 per cent in March 2015. This substantial improvement highlights India's banking sector's renewed stability and robustness and positions PSBs to better support economic growth. Notably, this CRAR far exceeds the Reserve Bank of India’s minimum requirement of 11.5 per cent, underscoring the strengthened financial health of these institutions.

PSBs continue to expand their reach across the nation, deepening financial inclusion. Their strengthened capital base and improved asset quality have enabled them to access markets independently, reducing reliance on government re-capitalisation.

Overall, Public Sector Banks in India have made remarkable strides in recent years, achieving unprecedented financial milestones and contributing significantly to the nation’s economic stability and growth.

The decline in Gross Non-Performing Assets and improved Capital Risk Assets Ratio reflects the sector’s resilience and sound risk management practices. The EASE framework has been crucial in institutionalising reforms, promoting prudent lending, and leveraging technology for better banking services.

The focus on financial inclusion has expanded access to banking, empowering millions with affordable credit and insurance. With a stronger financial base and improved asset quality, PSBs are well-positioned to support India's development agenda and drive inclusive economic growth.