Synopsis
The Economic Survey reveals that India's banking sector has seen a positive trajectory with NPAs dropping to a 12-year low of 2.6% and profits after tax climbing by 22.2% year-on-year in FY25's first half. Bank credit and deposits are also on an upward trend.Key Takeaways
- NPAs reduced to 2.6%, a 12-year low.
- Profit after tax surged by 22.2%.
- Bank credit and deposits are witnessing steady growth.
- MSMEs outpace large enterprises in credit growth.
- Significant progress in financial inclusion noted.
New Delhi, Jan 31 (NationPress) The monetary and financial landscapes of India have showcased remarkable performance during the initial nine months of the Financial Year 2024-25. As per the Economic Survey, the gross NPAs of banks have plummeted to a 12-year low of 2.6 percent by the end of September 2024. Additionally, their profitability has seen a significant uptick in H1 of FY25, with profit after tax soaring by 22.2 percent year-on-year.
Bank credit has demonstrated consistent growth in the current fiscal year, while deposits continue to show a double-digit growth. By the end of November 2024, the year-on-year growth in aggregate deposits of scheduled commercial banks reached 11.1 percent.
The survey underscores that, sector-wise, agricultural credit growth as of November 29, 2024, stood at 5.1 percent. Meanwhile, industrial credit growth accelerated to 4.4 percent at the end of November 2024, a rise from 3.2 percent recorded the previous year. Notably, bank credit to micro, small, and medium enterprises (MSMEs) has outpaced credit disbursement to large enterprises, showing a year-on-year growth of 13 percent for MSMEs compared to 6.1 percent for large enterprises as of November 2024.
Rural Financial Institutions also report diminished NPAs and enhanced credit uptake. The consolidated net profit of Regional Rural Banks (RRBs) surged from Rs 4,974 crore in FY23 to Rs 7,571 crore in FY24. The consolidated Capital to Risk (Weighted) Assets Ratio (CRAR) rose from 13.4 percent as of March 2023 to a historic high of 14.2 percent by March 31, 2024. The credit to deposit ratio of RRBs increased from 67.5 percent in March 2023 to 71.2 percent in March 2024.
In the first nine months of FY25 (April 2024-December 2024), the Monetary Policy Committee (MPC) of the RBI opted to maintain the policy repo rate at 6.5 percent to balance the essential goals of fostering growth while keeping inflation within acceptable levels. The survey notes that system liquidity, represented by the net position under the Liquidity Adjustment Facility, remained in surplus during October-November 2024.
The Survey indicates that the government has made substantial strides in financial inclusion, with the Financial Inclusion Index of the Reserve Bank of India (RBI) rising from 53.9 in March 2021 to 64.2 by March 2024. Rural Financial Institutions (RFIs) have played a crucial role in advancing India’s financial inclusion efforts. Moreover, Development Financial Institutions (DFIs) have significantly contributed to the nation's economic growth by financing infrastructure development initiatives.
