Prime Minister Narendra Modi recently highlighted a significant milestone in India's banking sector, emphasizing its remarkable turnaround over the past decade.
According to PM Modi, India's banking sector achieved a historic feat as its net profit surpassed Rs 3 lakh crore for the first time ever in FY24. This achievement marks a substantial improvement from the challenges faced by banks, including losses and high Non-Performing Assets (NPAs), when the BJP-led government assumed power.
PM Modi attributed the previous losses and NPAs to the policies of the former government, particularly highlighting what he referred to as the "phone-banking policy" of the UPA era. He noted that the banking sector's resurgence under the current administration has not only bolstered profitability but also facilitated enhanced credit availability for underserved segments such as the poor, farmers, and MSMEs.
As reported by Times of India, the net profit of listed public and private sector banks witnessed a robust 39% increase to Rs 3.1 lakh crore in FY24, up from Rs 2.2 lakh crore in FY23. Notably, public sector banks recorded a record net profit of Rs 1.4 lakh crore, marking a 34% increase over the previous fiscal year. Similarly, private sector banks saw their net profit surge by 42% to nearly Rs 1.7 lakh crore compared to Rs 1.2 lakh crore in the preceding year.
The widening earnings gap between public and private sector banks underscores the substantial strides made by both segments in enhancing profitability. The net profit of public sector banks has more than quadrupled in the last three years, reflecting their efforts to clean up balance sheets and bolster earnings.
Despite challenges such as one-time provisions for pensions and exposures to certain sectors, public sector banks have significantly contributed to the sector's overall profitability. In fact, the collective net profit of banks in FY24 surpasses the total quarterly profits of all listed companies in the first three quarters of the fiscal year.
This achievement underscores the pivotal role of the banking sector in India's economic landscape, with banks' profitability outpacing other major sectors such as IT services. While Reliance Industries retains the highest annual profit on a consolidated basis, banks' substantial earnings underscore their resilience and pivotal role in driving economic growth.
