President of India praises Public Sector Banks in India

On Thursday, June 27, the President of India, Droupadi Murmu, talked about the positive changes that have been made to the banking sector in the past 10 years. She mentioned that these reforms have made public sector banks (PSU banks) strong, profitable, and capable of driving the country’s economic growth. President Murmu highlighted that the State Bank of India (SBI), the largest bank in India, is currently making record profits, and the Life Insurance Corporation of India (LIC) has become more robust. She stated that the profits of PSU banks have increased by 35% in the financial year 2023-24 compared to the previous year.

• Stronger Banks: The President highlighted that these reforms have made Public Sector Banks (PSUs) more robust and profitable. This means these banks are financially healthier and better equipped to lend money.
• SBI and LIC as Examples: India’s largest bank, SBI, and insurance company, LIC, are both showing signs of improvement. SBI’s profits have increased by 35% compared to last year, and LIC’s net profit has also risen slightly.
• Reduced Non-Performing Assets (NPAs): NPAs are loans that are unlikely to be repaid. The President mentioned that NPA levels in PSUs are falling, indicating a decrease in risky loans.

Two years ago, the government implemented reforms to save the banking sector. These reforms have now positioned India’s banking sector among the strongest in the world. President Murmu specifically mentioned the implementation of the Insolvency and Bankruptcy Code (IBC) as one of the important laws that have contributed to these positive changes. She also noted that the non-performing assets (NPAs) of PSU banks are decreasing.

She also said that in last 10 years, India rose from the 11th position to become the 5th largest economy.

The pledge of reform, perform & transform has made India the fastest-growing economy in the world. In 10 years, India rose from the 11th position to become the 5th largest economy : @rashtrapatibhvn pic.twitter.com/NO1avE2NvC

— SansadTV (@sansad_tv) June 27, 2024

In the last quarter of the financial year 2023-24, the State Bank of India (SBI) reported a 24% rise in net profit, reaching Rs 20,698 crore. This increase was supported by strong demand for loans. Similarly, the Life Insurance Corporation of India reported a 2.5% year-on-year rise in net profit, totaling Rs 13,762 crore for the March quarter of the financial year 2023-24. The company also mentioned an improvement in its asset quality during this period.

During the January-March quarter of the financial year 2023-24, banks reported significant credit growth, maintaining a momentum of 15-25%. Public sector banks performed well in terms of credit growth compared to deposit growth. Bank of Baroda reported a credit growth of 12.41% compared to a deposit growth of 10.24%, while Punjab National Bank recorded credit and deposit growth numbers of 11.5% and 7% respectively on an annualized basis. Private lender YES Bank reported a credit growth of 14.1%, and HDFC Bank showed a sequential rise of 1.6%.

• SBI’s Profit Growth: SBI’s recent profit rise of 24% suggests a strong demand for loans and an overall positive financial performance.
• LIC’s Improved Asset Quality: LIC reported better asset quality, meaning they have fewer risky investments. They also declared a dividend payout to their shareholders.
• Overall Credit Growth: Banks across India, including PSUs, witnessed healthy credit growth of 15% to 25% in the last quarter. This indicates that businesses and individuals are borrowing more, which can boost economic activity.

On June 11, it was reported that the banking industry expects the Prime Minister Narendra Modi-led National Democratic Alliance’s (NDA) third tenure to focus on financial inclusion and insurance penetration, among other reforms. Experts believe that a stable central government can lead to a more focused and continuous approach to policy making. They also suggest that the new government should prioritize financial inclusion through bank accounts for all and insurance penetration as outlined by the Insurance Regulatory and Development Authority of India (IRDAI) for the year 2047.