Have Public Sector Banks Enhanced Their Profitability?
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Synopsis
In a significant development, public sector banks have shown remarkable improvements in profitability without any government capital infusion since 2022-23. Minister Pankaj Chaudhary shared insights in Parliament about their financial resurgence and ongoing recovery efforts for written-off loans.
Key Takeaways
- No government capital infusion since FY 2022-23.
- Public sector banks have raised Rs 1.79 lakh crore from markets.
- Written off loans total Rs 6,15,647 crore over five years.
- Recovery efforts are ongoing through various legal mechanisms.
- Write-offs do not impact liquidity due to prior provisioning.
New Delhi, Dec 8 (NationPress) The government has not injected any capital into public sector banks since the fiscal year 2022-23. This is due to the banks' remarkable improvement in their financial health, which has led them to achieve profitability and bolster their capital position, as stated in Parliament on Monday.
The Minister of State for Finance, Pankaj Chaudhary, informed the Lok Sabha in a written response that public sector banks are now utilizing market sources and internal accruals to fulfill their capital requirements.
Since April 1, 2022, up to September 30, 2025, public sector banks have successfully raised Rs 1.79 lakh crore from the market through equity and bonds, he noted.
According to data from the Reserve Bank of India (RBI), public sector banks have written off a total of Rs 6,15,647 crore in loans over the last five financial years and up to September 30 of the current year.
Chaudhary explained that banks write off Non-Performing Assets (NPAs) after full provisioning has been completed within four years, following RBI guidelines and policies approved by the banks' boards. However, this write-off does not absolve borrowers of their obligation to repay the loans.
Moreover, the recovery of written-off loans remains a continuous endeavor, with banks actively pursuing recovery actions against borrowers through various mechanisms, including civil court suits, Debts Recovery Tribunals (DRT), actions under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002, and cases filed in the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016, the minister further elaborated.
As provisioning for bad loans has already been accounted for, the write-off process does not involve any actual cash outflow, thereby maintaining the banks' liquidity. Furthermore, banks assess the implications of write-offs as part of their routine efforts to streamline their balance sheets, take advantage of tax benefits, optimize their capital base, enhance lending capacity, and elevate investor confidence, the minister added.
Point of View
It is imperative to highlight the resilience shown by public sector banks in India. Their ability to enhance profitability without government support demonstrates a significant shift in financial health. The ongoing recovery actions indicate a proactive approach to managing NPAs, ensuring stability and investor confidence in the banking sector.
NationPress
09/12/2025
Frequently Asked Questions
Why has there been no capital infusion from the government?
Public sector banks have improved their financial performance, achieving profitability and strengthening their capital positions, thus reducing dependency on government capital.
How much capital have public sector banks raised since 2022?
Since April 1, 2022, public sector banks have raised Rs 1.79 lakh crore from market sources through equity and bonds.
What is the process for writing off NPAs?
Banks write off NPAs after full provisioning has been completed, following RBI guidelines, but this does not relieve borrowers of their repayment obligations.
What recovery actions are banks taking for written-off loans?
Banks pursue recovery through civil suits, Debts Recovery Tribunals, and other mechanisms, including the SARFAESI Act and NCLT cases.
How does the write-off process impact banks' liquidity?
Since provisioning for bad loans has already been made, write-offs do not involve cash outflow, thus maintaining the banks' liquidity.
