PSU Reforms Boost Profits: SBI Sets Record, LIC Strengthens, Says Droupadi Murmu

President of India Droupadi Murmu stated on Thursday, June 27, that the reforms implemented by the government over the past decade have strengthened PSU banks, making them robust, profitable, and capable of driving the nation's economic growth. In her address to the joint Parliament session, President Murmu emphasized that numerous reforms carried out in the last ten years are now benefiting the nation.

She highlighted that the State Bank of India (SBI), the country's largest bank, is currently achieving record-level profits, and the Life Insurance Corporation of India (LIC) is significantly more robust. "Our public sector banks are now robust and profitable," President Murmu stated, noting that PSU banks' profits increased by 35% in the financial year 2023-24 compared to the previous year.

Two years ago, the government introduced banking reforms to revitalize the sector. President Murmu noted that these reforms have now positioned India's banking sector among the strongest globally. She mentioned the implementation of laws like the Insolvency and Bankruptcy Code (IBC) and highlighted that PSU banks' non-performing assets (NPAs) are also decreasing.

In Q4FY24, SBI, the country’s largest lender, reported a 24% increase in net profit, reaching ₹20,698 crore for the quarter ended March 31, 2024. This rise was driven by strong loan demand. In the same period the previous year, SBI had reported a net profit of ₹16,695 crore. 

Similarly, LIC reported a 2.5% year-on-year increase in net profit, reaching ₹13,762 crore for the March quarter of the financial year 2023-24, up from ₹13,421 crore in the same period the previous year. The country’s largest insurer, LIC, reported improved asset quality in the final quarter of FY24, as stated on May 27. The insurer announced an interim dividend of ₹6 per share. Its gross non-performing asset (GNPA) ratio stood at 2.01%, down from 2.56% in the same period the previous year.

In the January-March quarter of the financial year 2023-24, banks reported strong credit growth, maintaining a momentum of 15-25%. Public sector banks showed strong performance in credit growth compared to deposit growth. Bank of Baroda reported a credit growth of 12.41% compared to a deposit growth of 10.24%. Similarly, Punjab National Bank reported annualized credit growth of 11.5% and deposit growth of 7%. Private lender YES Bank reported a credit growth of 14.1%, while HDFC Bank's sequential numbers showed a rise of 1.6%.

Experts have stated that a stable central government can enable a more focused and consistent approach to policy making. They also emphasized that increased attention on financial inclusion, such as ensuring bank accounts for everyone, and boosting insurance penetration could be key priorities for the new government. This aligns with the Insurance Regulatory and Development Authority of India’s (IRDAI) goal of achieving insurance for all by 2047.