Prime Minister Narendra Modi has commended the “remarkable” revival witnessed in India’s banking sector, marking a significant milestone as net profits surged past Rs 3 lakh crore in the fiscal year 2024. According to a report by Moneycontrol released on May 20, private sector banks reported a combined net profit of Rs 1.78 lakh crore, surpassing the Rs 1.41 lakh crore reported by state-owned lenders.
The dominance of private banks in absolute profit terms was evident, with 26 institutions collectively outperforming their 12 state-owned counterparts. This notable turnaround underscores the efficacy of recent reforms in revitalizing the banking landscape, a sentiment echoed by PM Modi.
In a post on the X platform, Modi reflected on the challenges encountered upon assuming office, attributing the sector’s earlier woes to what he criticized as the “phone-banking policy” of the previous UPA government. He highlighted the detrimental impact of this policy, which, he claimed, had marginalized the poor and stifled credit access.
Modi’s remarks extended to the broader implications of the banking sector’s resurgence, emphasizing its potential to catalyze economic growth by facilitating enhanced credit availability. He reiterated the government’s commitment to ensuring equitable access to financial services, particularly for marginalized sectors such as micro, small, and medium enterprises (MSMEs), and farmers.
Industry experts have attributed the surge in profits to several factors, including sustained credit growth and prudent management of asset quality. The banks’ ability to maintain a robust bad loan book while achieving high net interest income contributed significantly to their profitability in FY24.
The buoyancy displayed by India’s banking sector comes amidst a backdrop of ongoing economic debates and policy scrutiny. While critics have raised concerns over issues such as unemployment and inflation, the sector’s robust performance serves as a testament to the efficacy of recent policy interventions.
Looking ahead, the focus is likely to remain on sustaining this positive momentum and addressing lingering challenges to ensure the banking sector continues to play a pivotal role in driving inclusive economic growth. Prime Minister Modi’s recognition of the sector’s achievements underscores the government’s commitment to fostering a conducive environment for financial stability and development.
