Public sector banks (PSBs) have made remarkable strides in reducing their gross non-performing asset (GNPA) ratio, which has dropped to an all-time low of 3.1% as of September 2024 from a staggering 14.6% in March 2018, according to a government report. This achievement underscores the success of the 4R’s strategy—Recognising NPAs transparently, Resolution & Recovery, Recapitalisation, and Reforms—implemented since 2015.
Capital adequacy among PSBs has also improved significantly, with the capital-to-risk-weighted assets ratio rising to 15.4% in September 2024 from 11.5% in March 2015. These improvements are reflected in their financial performance, as the collective net profit of PSBs reached ₹1.4 lakh crore in FY24, compared to ₹1.1 lakh crore in the previous fiscal year. Over three years, PSBs distributed ₹61,964 crore in dividends, demonstrating enhanced shareholder returns.
Rural and semi-urban inclusivity efforts have also expanded, with 1,00,686 out of 1,60,501 bank branches serving these areas. Flagship schemes like Mudra and PM-SVANidhi have increased access to credit, particularly for women and underserved groups. Advances to MSMEs grew by 15% annually, reaching ₹28 lakh crore in March 2024.
Key reforms in employee welfare, including transparent transfer policies, salary revisions under the 12th Bipartite Settlement, enhanced pensions, and staff welfare fund increases, have created a more motivated and efficient workforce.
Moreover, stricter provisioning for stressed loans, RBI’s asset quality reviews, and improved recovery and asset management practices have played pivotal roles in addressing NPAs, reducing fresh NPA generation, and bolstering PSBs’ financial health. This transformation underscores the sector’s resilience and growth potential.
