Public sector banks have boosted their profitability: Minister

New Delhi, Dec 8 There has been no capital infusion by the government in public sector banks since the financial year 2022-23, as they have significantly improved their financial performance to turn profitable and strengthened their capital position, the Parliament was informed on Monday.

Minister of State for Finance Pankaj Chaudhary told the Lok Sabha, in a written reply to a question, that public sector banks now rely on market sources and internal accruals to meet their capital requirements.

Public sector banks have raised Rs 1.79 lakh crore capital from the market through equity and bonds since April 1, 2022, till September 30, 2025, he added.

As per Reserve Bank of India (RBI) data, public sector banks have written off an aggregate loan amount of Rs 6,15,647 crore during the last five financial years and the current financial year till September 30 this year, the minister said.

Chaudhary said that banks write off NPAs, including, inter alia, those in respect of which full provisioning has been made on completion of four years, as per the RBI guidelines and policy approved by the Boards of banks. However, such a write-off does not result in the waiver of the liabilities of borrowers to repay the loans.

Further, recovery in written-off loans is an ongoing process and banks continue pursuing their recovery actions initiated against borrowers under the various recovery mechanism available to them, such as filing of a suit in civil courts or in Debts Recovery Tribunals (DRT), action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act 2002, and filing of cases in the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016, the minister further stated.

As provisioning for bad loans has already been done and the write-off process does not entail any actual cash outflow, the bank’s liquidity position remains intact. Moreover, banks evaluate the impact of write-offs as part of their regular exercise to clean up their balance sheet, avail tax benefits, optimise capital base, enhance lending capacity and boost investor sentiments, the minister added.

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