Public sector banks (PSBs) in India have achieved a significant milestone as their cumulative profit surpassed the ₹1 lakh crore mark in the financial year ending in March 2023. This marks a remarkable turnaround for PSBs, considering they had collectively posted a net loss of ₹85,390 crore in 2017-18. An analysis of their financial results reveals that the 12 PSBs witnessed a 57% increase in total profit compared to the previous year, earning ₹1,04,649 crore in 2022-23.
Among the PSBs, the State Bank of India (SBI), the market leader, accounted for nearly half of the total earnings. SBI reported an annual profit of ₹50,232 crore in 2022-23, showing a notable increase of 59% over the preceding financial year. The other PSBs also reported impressive growth in their profit after tax. Pune-based Bank of Maharashtra (BoM) recorded the highest net profit growth with a remarkable 126% increase to ₹2,602 crore, followed by UCO Bank with a 100% rise to ₹1,862 crore, and Bank of Baroda with a 94% increase to ₹14,110 crore.
While most PSBs reported substantial increases in their annual profit, Punjab National Bank (PNB) experienced a 27% decline in annual net profit from ₹3,457 crore in 2021-22 to ₹2,507 crore in the year ending March 2023.
PSBs such as Bank of Baroda and Canara Bank reported annual profits exceeding ₹10,000 crores, with Bank of Baroda earning ₹14,110 crores and Canara Bank earning ₹10,604 crores. Other PSBs, including Punjab and Sind Bank, Central Bank of India, Indian Overseas Bank, Bank of India, Indian Bank, and Union Bank of India, also posted notable annual profit growth.
The turnaround story of PSBs can be attributed to the initiatives and reforms implemented by the government under the leadership of Prime Minister Narendra Modi, former Finance Minister Arun Jaitley, and financial services secretaries like Rajiv Kumar and their successors. The government’s comprehensive 4R strategy, involving recognizing non-performing assets (NPAs) transparently, resolving and recovering them, recapitalizing PSBs, and implementing reforms in the financial ecosystem, has played a significant role in the sector’s revival.
Over the past five financial years, from 2016-17 to 2020-21, the government infused an unprecedented ₹3,10,997 crore to recapitalize PSBs, providing crucial support and averting the possibility of defaults. Additionally, reforms addressing credit discipline, responsible lending, improved governance, technology adoption, bank amalgamation, and maintaining confidence in the banking sector have further contributed to the positive results.
In the latest quarter of 2022-23, the PSBs’ cumulative profit increased by over 95% to ₹34,483 crore compared to the same period the previous year. Analysts attribute this improved profitability to higher interest income and better management of non-performing assets.
The significant improvement in the financial performance of PSBs reflects the resilience and positive impact of the government’s strategic initiatives and reforms. It bodes well for the banking sector and the overall economy, as profitable PSBs contribute to a stable financial system and support economic growth.
