Public sector banks' cumulative profit crossed the Rs 1 lakh crore-mark in the financial year ended March 2023, with market leader State Bank of India SBI ) accounting for nearly half of the total earnings. The doom-to-bloom story of the public sector banking industry can be attributed to the initiatives and spate of reforms undertaken by the government led by Prime Minister Narendra Modi, along with former finance minister Arun Jaitley and financial services secretary Rajiv Kumar and his sucessors.The government has implemented a comprehensive 4R strategy: Recognising NPAs transparently, Resolution and recovery, Recapitalising PSBs, and Reforms in the financial ecosystem.As part of the strategy, the government infused an unprecedented Rs 3,10,997 crore to recapitalise PSBs during the last five financial years -- from 2016-17 to 2020-21. The recapitalisation programme provided much-needed support to the PSBs and prevented the possibility of any default on their part.The reforms undertaken by the government over the last eight years addressed credit discipline, ensured responsible lending and improved governance. Besides, there was adoption of technology, amalgamation of banks, and general confidence of bankers was maintained.In the latest March quarter or the fourth quarter of 2022-23, the PSBs' profit cumulatively increased more than 95 per cent to Rs 34,483 crore. In the year-ago period, the same was at Rs 17,666 crore.Analysts said that higher interest income and improvement in management of non-performing assets or bad loans are among the key reasons for the improved profitability of the banks.

Source: Economic Times May 21, 2023 14:12 UTC