New Delhi: The financial year ending in March 2023 marked a significant milestone for public sector banks (PSBs) in India, as their cumulative profit crossed the Rs 1 lakh crore-mark.

This achievement represents a remarkable turnaround for the PSBs, which collectively reported a net loss of Rs 85,390 crore in 2017-18.

The impressive profit growth can be attributed to a series of initiatives and reforms implemented by the government, along with factors such as improved credit discipline, responsible lending, and technological advancements. The State Bank of India (SBI), as the market leader, made a substantial contribution to the overall earnings.

Among the PSBs, Bank of Maharashtra (BoM), based in Pune, witnessed the highest net profit growth in percentage terms, with a staggering 126 percent increase to Rs 2,602 crore. It was followed by UCO Bank, which saw a net profit rise of 100 percent to Rs 1,862 crore, and Bank of Baroda, reporting a 94 percent increase to Rs 14,110 crore. In absolute terms, SBI topped the list with an annual profit of Rs 50,232 crore, showing a 59 percent increase compared to the previous financial year. Other PSBs, except for Punjab National Bank (PNB), also reported impressive annual increases in their profit after tax.

Bank of Baroda emerged as one of the leading contributors to the PSBs' overall profit, reporting an annual profit of Rs 14,110 crore. Canara Bank also made a significant contribution, recording a profit of Rs 10,604 crore. These two banks surpassed the Rs 10,000 crore mark in annual profit. 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 demonstrated robust profit growth ranging from 18 percent to 61 percent.

The success story of the PSBs' turnaround can be attributed to the comprehensive 4R strategy implemented by the government, led by Prime Minister Narendra Modi, former Finance Minister Arun Jaitley, and financial services secretary Rajiv Kumar. The strategy involved recognizing non-performing assets (NPAs) transparently, resolving and recovering them, recapitalizing the PSBs, and introducing reforms in the financial ecosystem. Over the last five financial years, the government infused an unprecedented amount of Rs 3,10,997 crore to recapitalize the PSBs, providing crucial support and preventing potential defaults.

Improved profitability among PSBs can be attributed to several factors. Higher interest income and better management of non-performing assets or bad loans played a significant role. The government's reforms addressed credit discipline, ensuring responsible lending practices, and improving governance within the banking sector. Technological advancements and the amalgamation of banks also contributed to the enhanced performance of the banks. The overall confidence in the banking industry remained strong, further supporting the positive growth trajectory.

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