Profits tripled to Rs 1.04 lakh crore for PSU banks in 9 years, says Finance Minister

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New Delhi, July 1

Nudging banks not to sit back and revel in past success, Finance Minister Nirmala Sitharaman on Saturday urged them to continue focusing on best governance practices as she cited the tripling of public sector banks’ (PSBs) profit to over Rs 1 lakh crore over the past nine years.

Best practices

Banks should not sit back & revel in success. They should follow the best corporate governance practices and adhere to regulatory norms. Nirmala Sitharaman, Finance Minister

The FM said banks must sustain the momentum to continue fuelling the economy and ensure robust asset liability and risk management. She said the PSBs’ profit in the past nine years had grown three times to touch Rs 1.04 lakh crore and attributed the feat to government policies and initiatives. “The net profit of the PSBs has almost tripled to Rs 1.04 lakh crore in FY23 from Rs 36,270 crore in FY2014, the FM said. She was speaking at the inauguration of the corporate office of Punjab and Sind Bank here today.

On a day when India’s HDFC Bank broke into the club of the world’s four most valuable banks after effecting a mega merger, the minister asked banks to build on laurels. “Banks should not sit back and revel in success. They should follow best corporate governance practices, adhere to regulatory norms, ensure prudent liquidity management and continue to focus on having robust asset-liability and risk management,” Sitharaman said.

The FM said in the past, the Indian economy faced the problem of twin balance sheets where the stress was on the balance sheets of banks and corporate at the same time. Sitharaman mentioned the infamous “phone banking” phrase in jibes at the Congress-led UPA government.

“Before the BJP government led by PM Narendra Modi came to power in 2014, difficulty in the Indian banking system stemmed from irrational phone banking, which happened during the tenure of the UPA government. Back then, the priority in lending was given to not-so-worthy customers in an unprofessional manner. As a result, they became NPAs,” the FM said, adding that the result of the BJP dispensation’s practices was that the twin balance sheet problems had ended.

“I’m glad to say that the problems of twin balance sheets have gone away,” said Sitharaman.

She quoted the Reserve Bank of India to say “now banks have a twin balance sheet advantage benefiting the Indian economy”.

“It is our duty towards the people of India to ensure that the banks can build on the strength and not lose this momentum that we have achieved,” said the FM noting that all critical parameters of the PSBs had improved.

She listed the 4R strategy of the government as the reason for success of the PSBs recognising the problem of non-performing assets, recapitalising the banks, resolving their problems, and reforming them.

The FM said banks should proactively engage people and ensure optimum utilisation of financial inclusion schemes.

GST mop-up rises 12% this June

• Gross GST revenue in June up 2.80% to Rs 1.61 lakh crore as compared to Rs 1.57 lakh crore in May
• June intake saw 12% year-on-year growth & crossed the Rs 1.61-lakh-crore mark for the 4th time since GST inception
• It crossed Rs 1.4 lakh crore for 16 months in a row; and Rs 1.5 lakh for the 7th time since inception
• The gross GST revenue collection had touched a record Rs 1.87 lakh crore in April