Gross NPAs of PSU Banks Drop to 3.1% from 14.6% in '18

MUMBAI: The gross non-performing asset (GNPA) ratio of public sector banks has reached a record low of 3.1% as of September 2024, significantly down from 14.6% in March 2018, according to a government statement. This improvement follows the implementation of the 4R's strategy introduced in 2015: Recognising NPAs transparently, resolution & recovery, recapitalisation, and reforms in the financial system.

PSBs have also strengthened their capital adequacy, with the capital-to-risk-weighted assets ratio improving to 15.4% in September 2024 from 11.5% in March 2015. Their aggregate net profit for FY24 hit Rs 1.4 lakh crore, a rise from Rs 1.1 lakh crore in the year-ago period. Over three years, PSBs distributed Rs 61,964 crore in dividends, reflecting improved shareholder returns.

Inclusivity efforts have expanded as well, with 1,00,686 of 1,60,501 bank branches located in rural and semi-urban areas. Flagship schemes like Mudra and PM-SVANidhi have increased access to credit, benefiting women and underserved groups. Advances to MSMEs grew at an annual rate of 15%, reaching Rs 28 lakh crore in March this year.

To support employees, the government introduced transparent transfer policies, revised salaries under the 12th Bipartite Settlement, enhanced pensions, and increased staff welfare funds. These reforms have created a more robust and efficient workforce, ensuring PSBs remain competitive and financially sound, the statement said.

RBI's asset quality review, stricter provisioning for stressed loans, and enhanced recovery efforts played key roles in addressing NPAs. Along with these, improved asset management practices and reduced fresh NPA generation have bolstered PSBs' financial health.