Speaking at an event in Udupi, the minister said banks are now profitable after having come out of the problem and their asset qualities have improved.
Finance Minister Nirmala Sitharaman on Friday said banks’ balance sheet and the corporate balance sheet are both in an advantageous position and that momentum needs to be sustained.
Speaking at an event in Udupi, the minister said banks are now profitable after having come out of the problem and their asset qualities have improved.
“They are now very clearly looking forward towards expanding on core banking activity. Now, the expression that the Reserve Bank has used about this is that India is in a twin balance sheet advantage position,” she said.
The ‘twin balance sheet’ issue refers to the earlier problematic balance sheets of both companies and banks. Companies had excessive debt and insufficient funds to repay it. It has been a significant concern for the Indian economy, as it hampered credit growth and investment.
In fact, bad loans had crossed `8 trillion, and the NPA ratio had reached almost 12% in 2016-17. To strengthen public sector banks, between FY17 and FY21, the government infused over Rs 3 trillion. In 2021, a separate bank called the National Asset Reconstruction Company (NARCL) was established to handle bad debts only.
As on March 2023, banks’ Gross NPA ratio fell to a 10-year low of 3.9%, and the net NPA ratio fell to 1%. Moreover, the profit after tax of banks grew by 38.4% in 2022-23.
Talking about the jump in budgetary allocation by almost seven times in nine years for MSMEs, Sitharaman said this symbolised the government’s unwavering commitment to empowering the sector.
In 2023-24, the budgetary allocation for MSME sector was approximately `22,138 crore as against `3,285 crore in 2013-14, after which the current government assumed power.
“The public procurement policy for micro and small industries is a very important tool to support the growth of the MSME sector. The public sector enterprises, 158 of them, have procured 33% of their total procurement from MSMEs which is the highest ever,” Sitharaman said.
.jpg)
