13 public sector banks in India report profits in HI of fiscal year

The Ministry of Finance said that the health of public sector banks (PSBs) which have been reeling under non-performing assets for the last few years has been restored and a total of 13 banks reported profits in the first half of the current fiscal.

Addressing the media after meeting the chiefs of public sector banks, Finance Minister Nirmala Sitharaman said that the reform measures undertaken by the government have helped bring the banks back to shape.

A statement from the ministry noted that the gross NPAs of the state-run banks have declined from Rs8.96 lakh crore in March 2018 to Rs7.27 lakh crore in Sept.2019.

“Extensive reforms carried out by the government have restored banks to health, with the gross NPAs of PSBs declining from Rs8.96 lakh crore in March 2018 to Rs7.27 lakh crore in September 2019, their provision coverage ratio rising to their highest level in seven years, and banks returning to profitability, with as many as 13 banks reporting profits in H1FY20,” the statement said.

It further said that with the Essar Steel resolution decision, banks have recovered Rs38,896 crore, in addition to Rs4.53 lakh crore recovered in the last four-and-a-half years.

It said that PSBs have attached assets worth over Rs2.3 lakh crore over the last three financial years. Public sector banks (PSBs) have returned to profitability in 2019-20, posting an aggregate profit of Rs3,221 crore in the first half ending September, Minister of State for Finance Anurag Singh Thakur said in the Parliament.

PSBs had posted huge losses in 2017-18 and 2018-19 financial years due to heavy provisioning for non-performing assets and other contingencies, according to the minister.

State-run lenders had posted aggregate operating profits during 2017-18 and 2018-19 of Rs1,55,603 crore and Rs1,53,871 crore respectively.

However, they made aggregate provisions for NPAs and other contingencies of Rs2,40,973 crore and Rs2,35,623 crore in FY2018 and FY2019, respectively, he said in a written reply in Lok Sabha on Monday. This resulted in aggregate net losses of Rs85,370 crore and Rs81,752 crore in 2017-18 and 2018-19 respectively.

“Further, PSBs have returned to profitability in the current fiscal, reporting an aggregate profit of Rs3,221 crore in the aggregate profit of Rs 3,221 crore in the first half of the current fiscal,” Thakur said.

He said their aggregate gross advances increased to Rs68.76 lakh crore as on March 31, 2014 from Rs25.03 lakh crore as on March end 2008. As per RBI inputs, the primary reasons for the spurt in stressed assets have been observed to be, aggressive lending practices, wilful default/loan frauds/corruption in some cases, and economic slowdown, the minister said.

He was responding to a question whether the losses into a question whether the losses in public and private sector banks have been caused by increasing frauds.The Asset Quality Review (AQR) initiated in 2015 by the RBI for clean and fully provisioned bank balance-sheets revealed high incidence of non-performing assets (NPAs), the minister said.

The RBI has issued various guidelines on safeguards on frauds, misappropriation, embezzlements and defalcation of funds for Urban Cooperative Banks (UCBs), he added.

Stock price of Yes Bank on BSE extended losses on Tuesday, falling nearly 12 per cent, as investors feared an adverse outcome of the crucial board meeting later.

The Ravneet Gill-led fourth largest bank is expected to take a call on the $2 billion investment offers. A spike in volumes (trading in a stock) was also seen in Yes Bank as investors rushed to sell the banks shares ahead of the board meeting which may well prove to be the turning point for the bank.

Yes Bank has also been the most active stock for the past consecutive months owing to divergent news flow.

Investors are running scared over reports that the bank may decline to accept the $1.2 billion offer by the controversial Canada-based Erwin Singh Braich. The investment offer by Braich is the biggest chunk of the $2 billion investments offer to revive the struggling bank.

A lack of enthusiasm was seen among investors after bank last month declared the list of investors who have offered to invest in Yes Bank.

Investors doubt stemmed from the fact that Braich has been involved in a number of bankruptcy cases, lawsuits and failed business deals.

Besides, the lack of information on Braich, who seems to steer the revival of the struggling Yes Bank, has also troubled investors off-late. Moreover, some reports have also emerged that marquee investor Rakesh Jhunjhunwala may also be out of contention.

Indo-Asian News Service