Finance Minister Nirmala Sitharaman
For the first time, the banking sector’s net profit crossed Rs 3 lakh crore in FY24, with the net profit of listed public and private sector banks rising 39 per cent to Rs 3.1 lakh crore from Rs 2.2 lakh crore in FY23. The historic milestone of the banking sector’s net profit surpassing Rs 3 lakh crore in FY24 is a significant positive development for India. This achievement holds several important implications for the country’s economy, financial stability, and overall growth prospects.
Finance Minister Nirmala Sitharaman took to X to share this significant milestone, announcing the crossing of Rs 3 lakh crore in net profit by the banking sector for the first time in FY24.
https://twitter.com/nsitharaman/status/1792383324544958862?t=3npCGdL0774IS9hFuJzn9g&s=08 )
Public sector banks made a significant contribution to this success by earning a record Rs 1.4 lakh crore in profit, up 34 per cent from last year. Meanwhile, private banks did even better, increasing their profit by 42 per cent to almost Rs 1.7 lakh crore, compared to Rs 1.2 lakh crore last year. This means private banks are doing even better than public ones, showing how they are growing faster and using smart strategies to get ahead.
To understand how big this achievement is, think of it like this: the Rs 3 lakh crore profit made by the banking sector is almost the same as what all the companies listed on the stock market earned in the first three quarters of the year combined. That’s a huge amount! What’s more, the banks made even more profit than the IT services companies, which are usually the top earners. In the financial year 24, these IT companies together made about Rs 1.1 lakh crore.
Reliance Industries is still the company that makes the most money overall, reporting a profit of Rs 79,020 crore for the year. But when you look at Reliance by itself, its profit stayed the same at Rs 42,042 crore in FY24. Among the top 10 companies listed, TCS made the most profit with Rs 43,559 crore, followed by Indian Oil with Rs 39,618 crore, ONGC with Rs 38,828 crore, and Infosys with Rs 27,234 crore. This shows just how important and profitable the banking sector has become, highlighting its vital role in the economy.
Lately, government-owned banks have worked hard to catch up with private banks in making more money. In the last three years, the profit of these banks has gone up four times, showing they are managing their money better and becoming more efficient.
Public sector banks could have made even more money in FY24 if they didn’t have to set aside some cash for pensions. But because they didn’t have to put away as much as expected, investors were happy and their stock prices went up. Some banks, like Bank of Baroda, had to set aside extra money because of loans they gave to Go Air, even though those loans were backed by collateral.
The big rise in profits shows that banks are doing well and working effectively. When banks are healthy and make good profits, they can lend more money to businesses and people. This helps economic activities in different areas grow. This stability is really important because it keeps people who put money in the bank, investors, and other important people feeling confident. Building better infrastructure, like roads and power plants, is really important for India’s growth in the long term. It helps connect places better, makes people more productive, and attracts investments from other countries. Banks that are financially strong can help fund projects like building roads, energy projects, managing water, and making cities better, which helps the country move forward.
Under PM Modi’s leadership, the banking sector’s exceptional financial performance in FY24 has been greatly facilitated. This accomplishment not only emphasises the sector’s ability to bounce back and its potential for growth but also sets a higher bar for profitability. The impressive net profits bode well for the sector’s future, indicating strong foundations and bright prospects under PM Modi’s guidance.
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