India's banking sector hits historic high with over Rs 3 lakh crore net profit: PM Modi celebrates achievement
The Prime Minister stressed the broader implications of this achievement and said, "This improvement in the health of banks will help improve credit availability to our poor, farmers, and MSMEs."
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FollowPrime Minister Narendra Modi on Monday (May 20) celebrated the unprecedented success of India's banking sector, which achieved a net profit exceeding Rs 3 lakh crore for the first time in its history. Taking to X (formerly Twitter), PM Modi remarked on the sector's remarkable turnaround over the past decade.
"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," PM Modi wrote. "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," he added.
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The Prime Minister stressed the broader implications of this achievement and said, "This improvement in the health of banks will help improve credit availability to our poor, farmers, and MSMEs."
The financial year 2023-24 saw the banking sector's net profit surge past Rs 3 lakh crore, marking a significant milestone. The combined net profit of listed public and private sector banks soared by 39%, reaching Rs 3.1 lakh crore, compared to Rs 2.2 lakh crore in the previous fiscal year.
It is reportedly said that public sector banks recorded net profit of Rs 1.4 lakh crore, reflecting a 34% increase from the previous year. Meanwhile, private sector banks achieved a 42% rise in net profit, amounting to nearly Rs 1.7 lakh crore, up from Rs 1.2 lakh crore the previous year. This has widened the earnings gap between the two sectors.
To put these figures in perspective, the Rs 3 lakh crore net profit is comparable to the total quarterly profits of all listed companies over the first three quarters of the fiscal year. Remarkably, the banking sector's profits have surpassed those of the IT services sector, which has been the most profitable in recent years, with listed IT services companies reporting a net profit of nearly Rs 1.1 lakh crore for FY24.
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Public sector banks have significantly narrowed their profit gap with private banks by cleaning up their balance sheets and boosting earnings. The net profit of public sector banks has more than quadrupled in the last three years.
It is noteworthy that public sector banks would have reported even higher net profits in FY24 if not for a one-time pension provision made by several banks. Despite this, the lower-than-expected pension provisions resulted in a gain in their shares. Some public sector banks, like Bank of Baroda, faced additional provisions due to their exposure to Go Air, although these loans are collateralised.
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