New Delhi: The government is unlikely to announce recapitalization for public sector banks (PSBs) in the upcoming budget as their financial health has improved significantly and they are on track to post a combined profit of Rs 1 lakh crore, sources said. Their capital adequacy ratios are much higher than regulatory requirements and vary between 14-20 percent.
To increase their assets, banks are raising growth funds from the market and selling their non-core assets, they added. The government last provided capital support to banks in 2021-22. It allocated Rs 20,000 crore for recapitalization of PSBs through supplementary claims for grants.
The government has mobilized Rs 3,10,997 crore for recapitalization of banks in the last five financial years from 2016-17 to 2020-21, of which Rs 34,997 crore was issued through budgetary allocation and Rs 2,76,000 crore through recapitalisation. To these banks. Finance Minister Nirmala Sitharaman is scheduled to present the fifth and final full budget of the Modi 2.0 government on February 1. The 12 public sector banks posted a cumulative profit of around Rs 15,306 crore in the first quarter, which rose to Rs 25,685 crore. September quarter.
On a year-on-year basis, the growth was 9 percent in the first quarter and increased to 50 percent in the second quarter. In the second quarter, SBI reported a record profit of Rs 13,265 crore. On a year-on-year basis, it was up 74 percent.
In the first half of FY23, the cumulative net profit of all PSBs rose 32 percent to Rs 40,991 crore. Consolidated profit more than doubled to Rs 66,539 crore in 2021-22 despite Covid-19 pressure.
Many state-owned banks have also declared dividends in the last financial year after a period of stagnation. In all, nine banks, including SBI, declared dividends worth Rs 7,867 crore to shareholders. Recently, the finance minister said the government’s efforts to reduce bad loans are paying off and 12 PSBs reported a 50 per cent jump in the September quarter to a combined net profit of Rs 25,685 crore. The government’s 4Rs strategy of recognition, resolution, recapitalization and reform resulted in the reduction in NPAs, he said.
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