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India’s Banking Sector Flourishes Under Prime Minister Modi’s Leadership


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In a recent post, Finance Minister Nirmala Sitharaman highlighted the remarkable progress of India’s banking sector under the strong and decisive leadership of Prime Minister Narendra Modi. She announced that the sector has achieved a significant milestone by recording its highest-ever net profit of over ₹3 lakh crore.

During the fiscal year 2023-24, public sector banks witnessed the highest-ever aggregate net profit of ₹1.41 lakh crore, which is almost four times higher than the ₹36,270 crore recorded in fiscal year 2014. Sitharaman emphasized that the government has successfully transformed banks from being “NPA-laden nightmares” to “pillars of jan kalyan” (public welfare).

Sitharaman stated that the government has implemented a comprehensive strategy known as the 4Rs, which includes transparent recognition of non-performing assets (NPAs), resolution and recovery measures, recapitalization of public sector banks (PSBs), and reforms. As a result, the net NPAs of PSBs decreased from 3.92% in March 2015 to 0.76% in March 2024, and the gross NPA ratio declined from 4.97% in 2015 to 3.47% in March 2024.

The finance minister also highlighted the dividends declared by PSBs, with a total of Rs 27,830 crore distributed to shareholders in FY24, of which the government of India’s share was Rs 18,088 crore.

Sitharaman emphasized the government’s commitment to financial inclusion and empowerment of the underprivileged. Inclusive schemes such as Jan Dhan and MUDRA have ensured widespread access to banking services, and the government aims to further drive financial inclusion.

Furthermore, Sitharaman criticized the previous UPA government, stating that obtaining loans from banks during that time often depended on powerful connections rather than a solid business proposition. She accused the Congress-led UPA government of neglecting due diligence and risk assessment, resulting in the banking sector becoming plagued with bad loans, corruption, and mismanagement.

Sitharaman highlighted the success of the government’s efforts in recovering bad loans, with more than ₹10 lakh crore recovered between 2014 and 2023. The Enforcement Directorate has investigated around 1,105 bank fraud cases, leading to the attachment of ₹64,920 crore worth of proceeds of crime. As of December 2023, assets amounting to Rs 15,183 crore have been restituted to public sector banks.

The finance minister reiterated that there is no leniency in the process of recovering bad loans, particularly from large defaulters, and the efforts to address this issue are ongoing. Sitharaman assured that the government will continue to take decisive measures to strengthen and stabilize the banking system, ensuring that banks support India’s growth trajectory towards becoming a developed nation by 2047, as envisioned in the Viksit Bharat initiative.

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