Economic Survey 2021-22: Public Sector Banks Reduces Burden Of NPAs

The Government of India has released the Economic Survey 2021-22 on Monday. The survey report shows that during this period, public sector banks have improved their position significantly. The report said that banks have significantly reduced their burden on the non-performing assets (NPA) front. Not only this, public sector banks have also earned excellent net profit during this period. 

Schedule Commercial Banks Performance

The report says that the gross non-performing advances (GNPA) ratio of banks and the net non-performing assets (NNPA) ratio of scheduled commercial banks (including government, private and foreign banks) have continued to decline since the year 2018-19. The GNPA ratio of scheduled commercial banks declined from 7.5 per cent at the end of September 2020 to 6.9 per cent at the end of September 2021. The NNPA ratio of Scheduled Commercial Banks was 2.2 percent at the end of September 2021.

Decline in gross NPAs of public sector banks

The GNPA ratio of public sector banks has come down from 9.4 per cent at the end of September 2020 to 8.6 per cent at the end of September 2021. However, the stressed advance ratio of public sector banks increased marginally from 10.0 percent to 10.1 percent.

Net profit of banks

According to the Economic Survey Report 2022, the net profit of public sector banks was Rs 31,144 crore in the first half of 2021-22 against the net profit of Rs 14,688 crore in the first half of 2020-21. Similarly, the net profit of private sector banks increased from Rs 32,762 crore to Rs 38,234 crore in the same period. If we look at the net profit of scheduled commercial banks, the survey shows that it increased to Rs 78,729 crore at the end of September 2021 from Rs 59,426 crore at the end of September 2020.

Repo rate fall

RBI has reduced the policy rate i.e. repo rate by 250 basis points so far in February 2019. The weighted average lending rate (WALR) on loans declined by 197 basis points and by 133 basis points on outstanding loans during the period February 2019 to November 2021. Similarly, during April-November 2021, the fund-based 1-year average marginal cost of lending rate (MCLR) declined by 10 basis points.