Recapitalisation, reforms have worked well for public sector banks: SBI Chairman

Mumbai:  Recapitalisation and reforms in the last few years have really worked well for the public sector banks and balance sheets are cleaner now, State Bank of India (SBI) Chairman, C.S. Setty, said on Tuesday.

The saving behaviour has also changed as depositors are practising asset allocation across segments, Setty said during the NDTV Profit Conclave here.

He highlighted the critical role of capital in achieving the vision of a developed India (Viksit Bharat) and the need for diversified sources of debt capital beyond traditional bank loans.

“The trust element was always there and PSBs always carried a great amount of trust of depositors. What has changed in the last few years is that recognition, recapitalisation and reforms have really worked well for the public sector banks,” he told the gathering.

Setty further stated that balance sheets are cleaner.

“Most importantly, from the last cycle, we have learned our lesson in terms of how to use the great amount of data which is available now to underwrite the loans,” he said.

PSU banks, traditionally wholesale lenders, have now adopted a balanced mix of retail, agriculture, MSME and corporate loans, resulting in more balanced loan books.

According to Setty, one of the critical elements for the blueprint of Viksit Bharat to work is capital.

“Today, much of the debt capital comes from bank loans. The nature of saving is undergoing a change, there is a shift in depositors’ behaviour, and asset allocation is adopted across segments of savers,” he mentioned.

The SBI Chairman emphasised the need for deepening the bond market and leveraging capital from mutual funds, insurance and pension funds to achieve the goal of a $35 trillion economy by 2047.

The country’s largest public sector lender reported an impressive 84.32 per cent surge in net profit (year-on-year) at Rs 16,891 crore for the October-December quarter (Q3 FY25), from Rs 9,164 crore in the year-ago period. The profit rise was aided by higher core income during the quarter.

The net interest income (NII), or core income, was up 4.09 per cent from a year ago and stood at Rs 41,445.5 crore compared to Rs 39,816 crore, according to the bank’s stock exchange filing.

The gross NPA ratio improved to 2.07 per cent as on December 31, 2024, against 2.13 per cent in the September quarter. On a sequential basis, the net NPA ratio remained unchanged at 0.53 per cent as on December 31, 2024.

–IANS