PSBs Soar: Record Profits and Growth Amid FDI Reforms

Public sector banks in India are set to surpass Rs 2 lakh crore in profit this financial year, driven by strong credit and deposit growth. The sector remains resilient with improved asset quality and management. The government is considering increasing the FDI cap in these banks to 49%.

The robust financial health of India's public sector banks (PSBs) is paving the way for record-breaking profits this year, as the combined earnings are projected to surpass Rs 2 lakh crore. Financial Services Secretary M Nagaraju attributes this success to significant credit growth at 12% and deposit growth at 10%.

Asset quality has noticeably improved, with Gross NPA at a low of 2.30% and a provisioning coverage ratio of 94.63%. This, coupled with a strong capital adequacy ratio of 15.96%, reflects the resilience of PSBs against external economic factors, bolstered by prudent management under RBI's watch.

In an effort to fortify PSBs' capital base, the government is weighing an increase in the foreign direct investment (FDI) limit from 20% to 49%. This move could align PSBs more closely with private sector banks, which already allow up to 74% FDI under certain conditions.

(With inputs from agencies.)