PSBs Post Strong H1 FY25 Growth, Driven by Reforms and Technology

Public Sector Banks (PSBs) have shown a strong performance in the first half of FY 2024-25, with an 11% year-on-year (Y-o-Y) growth in aggregate business, reaching Rs 236 trillion. This growth has been driven by significant reforms, technological advancements, and a focus on improving governance and credit discipline.

Net profit saw an impressive 25.6% jump, reaching Rs 85,520 crore, while operating profit grew by 14.4%. The improvements in key financial metrics highlight the success of measures like the Insolvency and Bankruptcy Code (IBC), enhanced customer services, and technology adoption, all of which have contributed to the overall stability of the banking sector.

Key Performance Highlights

• Business Growth: 11% Y-o-Y growth to Rs 236 trillion.
• Operating Profit: Increased by 14.4% Y-o-Y, totaling Rs 1.5 trillion.
• Net Profit: Grew by 25.6%, reaching Rs 85,520 crore.

Credit and Deposit Portfolio

• Global Credit Portfolio: Increased by 12.9% Y-o-Y to Rs 102.29 trillion.
• Deposit Portfolio: Rose by 9.5% Y-o-Y to Rs 133.75 trillion.

NPA & Capital Ratios

• Gross NPA: Reduced to 3.12%, down by 108 bps Y-o-Y.
• Net NPA: Declined to 0.63%, down by 34 bps Y-o-Y.
• CRAR: 15.43% as of September 2024, well above the regulatory requirement of 11.5%.

Technological Advancements

PSBs have embraced technologies such as AI, cloud, and blockchain to enhance digital infrastructure and improve customer services. These efforts have also included a focus on cybersecurity and digitizing banking services.

Future Outlook

PSBs are also focusing on regulatory compliance, with the latest step being the implementation of re-KYC for Pradhan Mantri Jan Dhan Yojana (PMJDY) account holders, with the use of technologies like fingerprints and face recognition.

Summery of the News

Why in News	Key Points
PSBs report strong growth in FY 2024-25 (H1)	– PSBs’ aggregate business grew by 11% Y-o-Y to Rs 236 trillion.
	– Net profit increased by 25.6% to Rs 85,520 crore.
	– Operating profit grew by 14.4% Y-o-Y to Rs 1.5 trillion.
	– Global credit portfolio grew by 12.9% Y-o-Y to Rs 102.29 trillion.
	– Deposit portfolio grew by 9.5% Y-o-Y to Rs 133.75 trillion.
	– Gross NPA ratio decreased by 108 bps to 3.12%.
	– Net NPA ratio declined by 34 bps to 0.63%.
	– CRAR stood at 15.43%, above the regulatory requirement of 11.5%.
PSBs technological adoption and reforms	– PSBs adopted AI, cloud, blockchain, and upgraded digital infrastructure.
	– Measures like EASE and IBC have improved credit discipline and governance.
	– Regular monitoring of governance and financial health systems.
Pradhan Mantri Jan Dhan Yojana (PMJDY) re-KYC initiative	– Re-KYC process launched for PMJDY account holders.
	– Methods like fingerprints, face recognition, and digital channels being used.
List of 12 PSBs in India	– State Bank of India (SBI), Punjab National Bank (PNB), Bank of Baroda (BOB), Indian Overseas Bank (IOB), UCO Bank.
Key Reforms in PSBs	– Insolvency and Bankruptcy Code (IBC), National Asset Reconstruction Company Ltd. (NARCL), PSB amalgamations.