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Public sector banks ready for India’s $5tn mission

November 14, 2022

Public sector banks ready for India’s $5tn mission
Overhauled public sector banks are ready to play a key role in India’s mission of $5 trillion economy with robust performance of country’s 12 PSBs, experts said citing largest lender State Bank of India’s (SBI) record ₹13,264.52 crore net profit in the second quarter of 2022-23 compared to a net loss of ₹6,547 crore about 5 years ago.

The newly-formed Prime Minister Narendra Modi government’s bold decision to launch Asset Quality Review (AQR) on April 2015 to unearth hidden non-performing assets (NPAs) of past was first major step to professionalise and strengthen Indian banking sector, dominated by PSBs, at least five experts said adding that the result of the cleansing exercise is now evident.

Union finance minister Nirmala Sitharaman on November 7 tweeted, “The continuous efforts of our govt for reducing the NPAs & further strengthening the health of PSBs are now showing tangible results. All 12 PSBs declared net profit of ₹25,685 cr in Q2FY23 & total ₹40,991 cr in H1FY23, up by 50% & 31.6%, respectively (y-o-y).”

While SBI saw a 74% jump in its net profit in the same period, it was 89% for Canara Bank ( ₹2,525 crore), 145% for UCO Bank ( ₹504 crore), 58.7% for Bank of Baroda at ₹3,312.42 crore and 12% for Indian Bank at ₹1,225 crore. Stocks of many PSBs, including SBI, surged 52-week high that day.

Anand Dama, senior research analyst at Emkay Global Financial Services Ltd said SBI made a strong come back in Q2 “on the back of robust credit growth, sharp margin uptick and lower LLP” loan loss provisions.

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