Public sector banks have boosted their profitability: Minister
New Delhi, Dec 8
There has been no capital infusion by the government in public sector banks since the financial year 2022-23, as they have significantly improved their financial performance to turn profitable and strengthened their capital position, the Parliament was informed on Monday.
Minister of State for Finance Pankaj Chaudhary told the Lok Sabha, in a written reply to a question, that public sector banks now rely on market sources and internal accruals to meet their capital requirements.
Public sector banks have raised Rs 1.79 lakh crore capital from the market through equity and bonds since April 1, 2022, till September 30, 2025, he added.
As per Reserve Bank of India (RBI) data, public sector banks have written off an aggregate loan amount of Rs 6,15,647 crore during the last five financial years and the current financial year till September 30 this year, the minister said.
Chaudhary said that banks write off NPAs, including, inter alia, those in respect of which full provisioning has been made on completion of four years, as per the RBI guidelines and policy approved by the Boards of banks. However, such a write-off does not result in the waiver of the liabilities of borrowers to repay the loans.
Further, recovery in written-off loans is an ongoing process and banks continue pursuing their recovery actions initiated against borrowers under the various recovery mechanism available to them, such as filing of a suit in civil courts or in Debts Recovery Tribunals (DRT), action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002, and filing of cases in the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016, the minister further stated.
As provisioning for bad loans has already been done and the write-off process does not entail any actual cash outflow, the bank’s liquidity position remains intact. Moreover, banks evaluate the impact of write-offs as part of their regular exercise to clean up their balance sheet, avail tax benefits, optimise capital base, enhance lending capacity and boost investor sentiments, the minister added.
— IANS
Reader Comments
While the profitability is a positive sign, the write-off figure of over 6 lakh crore rupees is staggering. The minister says recovery is ongoing, but how much of that massive amount has actually been recovered? The public deserves more transparency on that front.
Finally some good news from our PSBs! No more burden on the exchequer. They are cleaning their books and becoming self-reliant. This should boost investor confidence. Now please focus on reducing loan interest rates for home buyers and small businesses. ðŸ™
Writing off loans worth lakhs of crores for big defaulters while common people struggle to get small loans approved... the system feels unfair. I'm glad the banks are profitable, but who ultimately bears the cost of these write-offs? Hope the recovery mechanisms are strong.
As someone who follows finance, this is a significant turnaround. Moving from government infusion to market funding shows these banks are being run more professionally. The write-off process, while large, is a standard accounting practice to clean the balance sheet, as explained.
Good step for the economy overall. Strong banks mean they can lend more to projects that create jobs. But the real test is whether this profit reaches the ground level. Are bank employees happier? Are customer service queues shorter? That's what matters to us.
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