Latest news with #PSBs
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Business Standard
an hour ago
- Business
- Business Standard
Public sector banks cut rates more than private peers: RBI report
Following a 100-basis-point cut in the policy repo rate since February this year, public sector banks have lowered their lending and deposit rates more than their private sector counterparts, data released by the Reserve Bank of India (RBI) showed. The decline in the weighted average lending rates on fresh rupee loans by public sector banks was 31 basis points till May, while that for private banks was 20 basis points. Foreign banks saw a sharper decline of 49 basis points (see table). For fresh deposits, rates for public sector banks fell 47 basis points compared to a 41-basis-point drop by private banks. The six-member rate-setting panel cut the policy repo rate by 50 basis points between February and May. In June, the rate was further reduced by another 50 basis points. 'During the current easing cycle (February–May 2025), the decline in weighted average lending rates on both fresh and outstanding rupee loans was higher for public sector banks (PSBs) as compared to private sector banks (PVBs),' the State of the Economy report of the RBI said. 'In response to the 100-bps reduction in the policy repo rate since February 2025, banks have adjusted their repo-linked external benchmark-based lending rates downward by 100 basis points and marginal cost of funds-based lending rates by 10 basis points,' it added. Consequently, the weighted average lending rates on fresh and outstanding rupee loans of scheduled commercial banks declined by 26 basis points (domestic banks: 24 bps) and 18 basis points (domestic banks: 16 bps), respectively, during February–May 2025. 'System liquidity remained in surplus to facilitate a faster transmission of policy rate cuts to the credit markets,' the report said. The report also observed that banks have been reducing savings account deposit rates, with some state-run banks now offering historically low rates. 'Banks have also reduced their rates on savings deposits. Currently, the savings deposit rates of some PSBs are prevailing at a historical low, since their de-regulation in 2011,' the report noted. State Bank of India, the country's largest lender, and HDFC Bank, the second-largest, both offer 2.5 per cent on savings account deposits. While noting that the rates on small savings schemes were kept unchanged by the government for the second quarter of the current financial year, the report said, 'The prevailing rates on these instruments are higher than the formula-based rates by 33–118 basis points.' On loan growth, the report said average bank credit growth continued to moderate across key sectors of the economy in May 2025. Credit to non-banking financial companies (NBFCs), on a year-on-year basis, contracted in May 2025 as they raised significant debt from capital markets via private placements. The report also highlighted a sharp deceleration in retail credit, due to a decline in personal loans, vehicle loans, and credit card outstanding. 'While overall credit to the industrial sector recorded subdued growth due to a decline in credit growth to infrastructure, credit to the MSME sector continued to remain buoyant,' it said. Commenting on the Indian economy, the report said it remained largely resilient, supported by strong fundamentals, despite global uncertainties. It said lower inflation and favourable farm sector prospects would support aggregate demand. 'Easing inflation, improving kharif season prospects, front-loading of government expenditure, targeted fiscal measures, and congenial financial conditions for faster transmission of rate reductions should support aggregate demand in the economy going forward.' The report observed that financial markets seem to have taken trade policy uncertainties in their stride, possibly reflecting optimism about reaching trade deals that are less disruptive to the global economy. 'Even so, underpricing of macroeconomic risk by financial markets remains a concern. The average trade tariff rates are set to touch levels unseen since the 1930s,' it said. The report emphasised the importance of building more resilient trade partnerships, presenting a strategic opportunity for India to deepen integration with global value chains. 'In addition, measures to accelerate domestic investment in infrastructure and structural reforms aimed at improving competitiveness and productivity would build resilience while supporting the growth momentum,' it added. The report was authored by RBI staff under the guidance of Poonam Gupta, deputy governor, RBI. The views expressed are those of the authors and not of the central bank, it was clarified.
The Wire
3 hours ago
- Business
- The Wire
PSBs Wrote Off More than Rs 12-Lakh Crore in Loans in Last Decade
Government data showed that write-offs in the last five fiscal years alone (FY21 to FY25) exceeded Rs 5.82 lakh crore. New Delhi: Public sector banks (PSBs) in India have written off loans amounting to more than Rs 12 lakh crore between the financial years 2015-16 and 2024-25, the finance ministry informed the Rajya Sabha on July 22. In a written reply, Minister of State for Finance Pankaj Chaudhary presented data revealing that PSBs wrote off an aggregate loan amount of Rs 12,08,828 crore. The data showed that write-offs in the last five fiscal years alone (FY21 to FY25) exceeded Rs 5.82 lakh crore. The ministry clarified that a "write-off" is a technical accounting procedure and does not constitute a waiver of the borrower's debt. "Such write-off does not result in a waiver of liabilities for borrowers and, therefore, it does not benefit the borrower," Chaudhary stated. "The borrowers continue to be liable for repayment, and banks continue to pursue recovery actions initiated in these accounts." This practice aligns with Reserve Bank of India (RBI) guidelines, where non-performing assets (NPAs) for which full provisioning has been made are typically written off the balance sheet after four years. The minister's reply also shed light on wilful defaulters. As of March 31, 2025, a total of 1,629 unique borrowers with an aggregate outstanding loan of over Rs 1.62 lakh crore were classified as wilful defaulters. In response, banks are pursuing recovery through mechanisms like the SARFAESI Act and the Insolvency and Bankruptcy Code (IBC). Additionally, enforcement actions have led to the confiscation of assets worth over Rs 15,000 crore under the Prevention of Money Laundering Act (PMLA) to date. While data indicated a decline in write-offs for 10 of the 12 PSBs over the last five years, State Bank of India and Canara Bank experienced an increase, particularly during FY25. In response to a separate question on employment, the Ministry noted that PSBs had recruited nearly 1.5 lakh employees over the last five years, with recruitment for another 48,570 positions currently underway. The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments.
Indian Express
3 hours ago
- Business
- Indian Express
Public sector banks wrote-off Rs 12.08 lakh crore loans since FY16
PSB Loan Write Off India: Public sector banks (PSBs) have written off loans worth Rs 12.08 lakh crore since FY16. In a written reply to Rajya Sabha on July 22, Minister of State for Finance Pankaj Chaudhary said, 'Banks write-off non-performing assets (NPAs), including, inter-alia, those in respect of which full provisioning has been made on completion of four years, as per RBI guidelines and policy approved by banks' Boards.' Chaudhary further added that such write-off does not result in waiver of liabilities of borrowers and therefore, it does not benefit the borrower. He added that the borrowers continue to be liable for repayment and banks continue to pursue recovery actions initiated in these accounts. 'As per the Reserve Bank of India (RBI) data, public sector banks (PSBs) have written-off an aggregate loan amount of Rs 12,08,828 crore, from the financial year 2015-16 to financial year 2024-25 (provisional data),' the Union Minister said. Chaudhary was responding to a query from TMC MP Ritabrata Banerjee, who asked whether Public Sector Banks had written off a huge amount of loans over the past ten years. Banerjee also requested bank-wise and year-wise data for the last five years, along with the reasons behind these write-offs. Chaudhary stated that recovery in written-off loans is an ongoing process. '…banks continue pursuing their recovery actions initiated against borrowers under the various recovery mechanism available to them, such as filing of a suit in civil courts or in Debts Recovery Tribunals, action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, filing of cases in the National Company Law Tribunal under the Insolvency and Bankruptcy Code, etc,' the MoS Finance said. (Amounts in crore Rs.) Source: RBI * RBI provisional data for FY 2024-25
New Indian Express
9 hours ago
- Business
- New Indian Express
Robbing poor to benefit rich is Modi government's mantra: Congress on loan write-offs by PSBs
NEW DELHI: The Congress on Wednesday accused the government of distributing "freebies" worth Rs 12 lakh crore to its billionaire friends through loan write-offs over the past nine years, and said "robbing the poor to benefit the rich" is the Narendra Modi dispensation's mantra. The opposition party's attack came over the government's reply in the Rajya Sabha that public sector banks (PSBs) have written off an aggregate loan amount of Rs 12,08,828 crore, from the financial year 2015-16 to the financial year 2024-25 (provisional data). In a post in Hindi on X, Kharge said, "The Modi government has distributed 'freebies' worth 12 lakh crore to its billionaire friends through loan write-offs over the past nine years." Economic inequality in the country is at its peak in 100 years, yet the Modi government is squandering lakhs of crores from public sector banks on its "friends", the Congress president alleged. "Robbing the poor to benefit the rich is the core mantra of the Modi government's economic policy!" he claimed. In a written reply to a question in the Rajya Sabha on Tuesday, Minister of State in the Finance Ministry Pankaj Chaudhary said, "As per the Reserve Bank of India (RBI) data, public sector banks (PSBs) have written-off an aggregate loan amount of Rs. 12,08,828 crore, from the financial year 2015-16 to financial year 2024-25 (provisional data)." "Banks write off non-performing assets (NPAs), including, inter alia, those in respect of which full provisioning has been made on completion of four years, as per RBI guidelines and policy approved by banks' Boards. Such write-off does not result in waiver of liabilities of borrowers and therefore, it does not benefit the borrower," the minister said. The borrowers continue to be liable for repayment, and banks continue to pursue recovery actions initiated in these accounts, he had said.
Mint
13 hours ago
- Business
- Mint
Financial inclusion has risen but that's only half the story
On Tuesday, the Reserve Bank of India released the reading of its Financial Inclusion Index for 2024-25. At 67, its value has risen from 64.2 recorded the previous year, thanks to gains across all sub-indices—namely, for financial access, usage and quality. Also read: Customers want returns. PSBs are waiving the minimum balance levy. According to the central bank, which created this index more than half a decade ago and published its first ever reading of 53.9 for 2020-21 in August 2021, last year's increase was led by progress on the dimensions of usage and quality, 'reflecting the deepening of financial inclusion and sustained financial literacy initiatives." That public access to formal services is the hardest nut to crack has long been evident, given the sheer expanse of India. Also read: Nudged by finance ministry, PSBs to develop new framework for NPA recovery; special teams to focus on high-value loans An army of banking correspondents was sent out to enrol residents of remote villages and Jan Dhan bank accounts have been tom-tommed, but many people still pay informal moneylenders usurious rates of interest; RBI's easing of lending rates has no bearing on their lives. It's tragic that the well-off get cheap loans while the hard-up pay a much higher price for money even if they're equally creditworthy. Inclusion must improve faster for an emancipatory measure of relief from this inequity. Also read: PSUs show dividend fatigue as payout ratios hit decade's low in FY25
