Finance Minister Nirmala Sitharaman Set to Unveil Banking Sector Measures in Union Budget 2024

Finance Minister Nirmala Sitharaman is gearing up to reveal crucial measures in the Union Budget 2024 on February 1. With public banks declared relatively healthy by the Reserve Bank of India, all eyes, especially those of executives and shareholders, are eagerly awaiting the announcements concerning the banking sector.

In the previous Budget for 2023, FM Sitharaman continued the trend for the second consecutive year, refraining from allocating funds for the recapitalization of public sector banks. This move signals policymakers’ confidence in the robust health of these banks, aligning with expectations.

Recently, the FM was slated to meet with the heads of public sector banks to assess their financial performance. The review covered various aspects, including financial inclusion, credit growth, asset quality, business growth plans for the next financial year, non-performing assets (NPAs), and recovery status.

Public sector banks have collectively earned a net profit of approximately Rs 68,500 crore during the initial six months of FY24.

Given that 2024 is an election year, the government is set to introduce a vote on account in February, with the complete budget presentation scheduled post the General Elections.

Banks have been actively raising funds from the market to bolster their resources. In FY22, the BJP-led government provided capital support to banks by earmarking Rs 20,000 crore for the recapitalization of public sector banks through supplementary demands for grants.

Between FY17 and FY21, the government injected around Rs 3.11 lakh crore to recapitalize banks, with Rs 34,997 crore sourced through budgetary allocation and Rs 2,76,000 crore through the issuance of recapitalization bonds to these banks.