"Over Rs 4,30,000 crore of taxpayer money is invested as Government's equity in PSBs. In 2019, every rupee of taxpayer money invested in PSBs, on average, lost 23 paise," the Economic Survey 2020 said.
Compared to this, every rupee of investor money invested in "New Private Banks" (NPBs) - banks licensed after India's 1991 liberalisation - on average, gained 9.6 paise. This means PSBs are far more inefficient compared to private banks and hence they need to catch up fast.
"As PSBs and NPBs operate in the same domestic market, there is a case for enhancing the efficiency of PSBs," the Survey, tabled in Parliament on Friday, said.
As PSBs account for 70 per cent of the market share in Indian banking, the onus of supporting the Indian economy and fostering its economic development falls on them.
However, in 2019, PSBs' collective losses - largely due to bad loans - amounted to over Rs 66,000 crore, or nearly double of the nation's budgetary allocation for education.
The PSBs account for 85 per cent of reported bank frauds while their gross non-performing assets (NPAs) equal Rs 7.4 lakh crore which is more than 150 per cent of the total infrastructure spend in 2019.
"The market-to-book ratio, which indicates the quality of a bank's governance, is 0.8 as on 20th January, 2020 for PSBs while that of the average NPB is close to 4," the Economic Survey said.
The Survey noted that structural solutions are necessary to enable PSBs to become efficient and thereby catalyse the banking sector and stimulate economic growth.
( With inputs from IANS )