PSBs NPA ratio has declined from 14.6% in 2018 to 5.53% in Dec 2022: Minister

The gross NPA ratio of PSBs have declined from a peak of 14.6% in March 2018 to 5.53% in December 2022, said MoS for Finance Dr Bhagwat Karad in LS
A file photo of Minister of State for Finance Dr Bhagwat Karad
A file photo of Minister of State for Finance Dr Bhagwat Karad

New Delhi: The asset quality of public sector banks has improved significantly with the gross NPA ratio declining from a peak of 14.6 percent in March 2018 to 5.53 percent in December 2022, said Minister of State (MoS) for Finance Dr Bhagwat Karad in the Lok Sabha on Monday. In a written response to a question raised in the Lower House of Parliament, Dr Baalu said, “Resilience has increased with provision coverage ratio of PSBs rising from 46.0 percent to 89.9 percent in December 2022.”

A file photo of Minister of State for Finance Dr Bhagwat Karad
DFS Secretary holds review meeting with PSB heads

Identifying NPA

“Asset Quality Review (AQR) initiated by the Reserve Bank of India (RBI) in 2015 revealed a high incidence of non-performing assets (NPAs) in banks. Following the AQR results, banks initiated transparent recognition, reclassifying standard restructured advances as NPAs and providing for expected losses on such advances,” Dr Karad told the House. He said that the government implemented a comprehensive 4Rs strategy of recognising NPAs transparently, resolution and recovery, recapitalising PSBs, and reforms in the financial ecosystem to address the problem.

PSBs earned Rs 70,167 cr profit in 9-month period of FY23

The minister told the House that all PSBs are in profit with aggregate profit being Rs 66,543 crore in the financial year (FY) 2021-22. And in the first nine months of the current fiscal, PSBs have earned an aggregate profit of Rs 70,167 crore, said Dr Karad. “Major banking reforms undertaken by the government over the last eight years addressed credit discipline, responsible lending and improved governance, besides adoption of technology, amalgamation of banks and maintaining a general confidence of bankers,” he said.

The capital adequacy ratio of PSBs has improved significantly from 11.5 percent in March 2015 to 14.5 percent in December 2022.

The total market cap of PSBs (excluding IDBI Bank, which was categorised as a private sector bank in January 2019) has increased from Rs 4.52 lakh crore in March 2018 to Rs 10.63 lakh crore in December 2022, said the minister.

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