New Delhi: Public Sector Banks (PSBs) 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 (GNPA) ratio steeply declined, dropping to 3.12% in September 2024.
Demonstrating continued momentum, they registered a net profit of ₹ 85,5206,000 crore in the first half of 2024-25. 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 (PSBs) has witnessed a remarkable improvement, declining to 3.12% in September 2024 from a peak of 14.58% in March 2018. This significant reduction reflects the success of targeted interventions aimed at addressing stress within the banking system.
A turning point came in 2015 when the Reserve Bank of India (RBI) initiated the Asset Quality Review (AQR). 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.
To address these challenges, the Government introduced a comprehensive 4R’s strategy.