Remarkable turnaround: PM Modi on Indian banking sector’s growth in 10 years

Mangalore Today News Network

New Delhi, 20 May 2024: Prime Minister Narendra Modi on Monday said that the banking sector has witnessed a remarkable turnaround in the last 10 years.

"In a remarkable turnaround in the last 10 years, India’s banking sector net profit crosses Rs 3 lakh crore for the first time ever," said PM Modi in a post on X.

He further said that when the BJP-led goverment came into power, banks were grappling with losses and high Non-Performing Assets (NPAs), largely attributed to the policies of the previous government.

"When we came to power, our banks were reeling with losses and high NPAs due to the phone-banking policy of UPA. The doors of the banks were closed for the poor. This improvement in the health of banks will help improve credit availability to our poor, farmers, and MSMEs," said PM Modi.

For the first time, the banking sector’s net profit crossed Rs 3 lakh crore in FY24, reported Times of India. The net profit of listed public and private sector banks rose 39% to Rs 3.1 lakh crore from Rs 2.2 lakh crore in FY23.

While public sector banks generated a record Rs 1.4 lakh crore in net profit during the year—an increase of 34% over the year-ago period—private sector banks increased their net by 42% to nearly Rs 1.7 lakh crore compared to Rs 1.2 lakh crore a year ago.

As a result, the earnings gap between the two sectors has widened.

To put things in perspective, Rs 3 lakh crore is approximately the total quarterly profits of all listed companies in the first three quarters of the fiscal.

In fact, banks’ profits are much higher than those of IT services, which have been the most profitable group in recent years—listed IT services companies reported a net profit of nearly Rs 1.1 lakh crore for FY24.

In the preceding years, public sector banks had narrowed their profit gap with private banks as they cleaned up their balance sheets and increased earnings.

The net profit of public sector banks has more than quadrupled in the last three years. Public sector banks would have had a higher net profit in FY24 if not for a one-time provision that several banks had to make towards pensions.

However, because the pension provisions were lower than expected, it led to a gain in their shares. Some public sector banks like Bank of Baroda also took a hit due to provisions for their exposure to Go Air, although the loan is collateralised.

On a consolidated basis, Reliance Industries still has the highest annual profit of Rs 79,020 crore. However, on a standalone basis, its profit was flat at Rs 42,042 crore in FY24.

Of the top 10 listed companies, TCS reported a net profit of Rs 43,559 crore for FY24, Indian Oil (Rs 39,618 crore), ONGC (Rs 38,828 crore) and Infosys (Rs 27,234 crore).