Public Sector Banks recorded highest ever aggregate net profit of ₹1.41 lakh crore during 2023-24

Enhanced HR policies and welfare measures in Public Sector Banks

Out of total 1,60,501 bank branches, 1,00,686 bank branches are in Rural and Semi-Urban (RUSU) areas

Gross advance of Scheduled Commercial Banks stood at Rs. 175 lakh crore in Mar-24

The Government has been proactively supporting the banking ecosystem and taking care of both business and employee welfare to maintain stability, transparency, and growth. Over the past decade, multiple citizen-and-staff-centric reformative initiatives have been taken by the Government in this direction. Following is a brief snapshot of the reforms in banking sector:

REFORMS IN THE BANKING SECTOR AND PERFORMANCE OF PUBLIC SECTOR BANKS (PSBS):

RBI initiated Asset Quality Review (AQR) in 2015 to identify and address the issue of stress in the banking system, under which, after transparent recognition by banks and withdrawal of the special treatment of restructured loans, stressed accounts were reclassified as Non-Performing Assets (NPAs) and expected losses on stressed loans, not provided for earlier as a result of the special treatment, were provided for, resulting in higher NPAs which peaked in 2018. Higher NPA and necessitated provisioning deeply impacted the financial parameters of banks and impeded their ability to grow and lend to productive sectors of the economy.

Since 2015, the Government implemented a comprehensive 4R’s strategy of Recognising NPAs transparently, Resolution and Recovery, Recapitalising PSBs, and Reforms in the financial system to address the challenges faced by PSBs. And as a result of the Government’s overarching policy reforms, the financial health and robustness of banking sector including of PSBs, has improved significantly. Notable improvements are visible through: –

1. Improvement in Asset quality —

• Gross NPA ratio of PSBs declining to 3.12% in Sep-24 from 4.97% in Mar-15 and from a peak of 14.58% Mar-18.

2. Improvement in Capital adequacy—

• CRAR of PSBs improving by 393 bps to reach 15.43% in Sep-24 from 11.45% in Mar-15.

3. During FY2023-24, PSBs have recorded highest ever aggregate net profit of ₹1.41 lakh crore against net profit of ₹1.05 lakh crore in FY2022-23, and recorded ₹0.86 lakh crore in the first half of FY2024-25.

4. During the last 3 years, PSBs have paid total dividend of ₹61,964 crore.

PSBs continue to expand their reach to every nook and corner of the country to deepen Financial Inclusion. Their capital base has strengthened and their asset quality has improved. Now they are able to go to market and access capital instead of depending upon the Government for recepitalisation.

• To deepen the Financial Inclusion in the country, 54 crore Jan Dhan accounts and more than 52 crore collateral-free loans under various flagship financial inclusion schemes (PM Mudra, Stand-Up India, PM-SVANidhi, PM Vishwakarma) have been sanctioned. Under the Mudra scheme, 68% of beneficiaries are women and under PM-SVANidhi scheme, 44% of beneficiaries are women.
• The number of bank branches have gone up from 1,17,990 in Mar-14 to 1,60,501 in Sep-24; Out of 1,60,501 branches, 1,00,686 branches are in Rural and Semi-Urban (RUSU) areas.
• KCC Scheme aims to provide the short-term crop loan to farmers. Total number of operative KCC Accounts as on September 2024 stood at 7.71 crore with total outstanding of Rs. 9.88 lakh crore.
• The Government of India (GoI) has consistently supported the MSME sector in terms of flow of credit at affordable rates through various initiatives. The MSME advances registered a CAGR of 15% during the last 3 years. Total MSME advances as on 31.03.2024 stood at Rs. 28.04 lakh crore, posted an annual growth of 17.2%.
• The gross advances of Scheduled Commercial Banks grew from Rs. 8.5 lakh crore to 61 lakh crore during 2004-2014, which has significantly increased to Rs.175 lakh crore in Mar-2024. 

HR POLICIES AND WELFARE MEASURES IN PUBLIC SECTOR BANKS

Transfers in PSBs:

With an aim to promote greater transparency and ensure formulation of a uniform, non-discretionary transfer policy, comprehensive advisory has been issued which is to be incorporated by the PSBs in their respective transfer policies.

In respect of women employees, PSBs have been, inter alia, advised that :

(a) Women employees to be posted to nearby places / stations / region

(b) Officers up to Scale III to be accommodated in their respective linguistic region in order ensure seamless customer service

(c) In addition to the available grounds of transfer, the grounds of marriage / spouse / medical / maternity / child care / far away postings also be suitably incorporated

(d) Transfers to be automated by developing an online platform with the provision to give location preferences in case of transfer / promotions

Welfare Measures for PSB Employees:

(a) 12^th Bipartite Settlement:

Through the implementation of 12^th BPS, the bank employees received a 17% increase in salary and allowance (Rs. 12,449 crore) including a load of 3% (Rs 1,795 crore).

Major Highlights:

(i) New pay-scales for all cadres, as per MoU and Cost Sheets.

(ii) Change in base year to 2016 for working out DA/DR (AICPI for Industrial workers on base 2016) by replacing the existing base year, i.e. 1960, and revised formula for calculating DA/DR rates for in-service staff and pensioners/ family pensioners.

(iii) Re-designation of award staff as ‘Customer Service Associates’ for better customer experience through higher delegation and expanded role with enhanced special pay.

(iv) Revised halting rates / lodging expenses, deputation allowance and Revised rates for reimbursement of expenses on road travel.

(v) Special leave provisions for women employees including those related to leave during menstrual period, infertility treatment, second child adoption and the events of still birth.

(b) Monthly ex-gratia amount to the pensioners:

A monthly Ex-gratia amount to pensioners and family pensioners for the current bipartite period has been introduced.

(c) Ex-gratia to pre-1986 retirees:

Ex-gratia to Pre-1986 retirees and their families have been increased from Rs. 4,946/- and Rs. 2,478 respectively to Rs. 10,000/- per month in both cases. It will benefit 105 retirees and 1382 spouses. Total additional cost is Rs. 4.73 crores per annum. It is implemented since Feb’2023.

(d) DA Neutralisation:

100% DA neutralization was given to pre-2002 retirees. 1,81,805 beneficiaries will be benefitted due this which will have a total additional cost of Rs. 631 crore per annum. It is implemented since Oct’2023.

(e) Pension Option to Bank resignees:

Option to opt for pension was provided to bank resignees who were otherwise eligible to join pension scheme. This measure will benefit approximately 3198 bank retirees and families. The total additional cost is Rs. 135 crore per annum.

(f) Staff Welfare Fund (SWF):

Staff welfare fund (SWF) is a fund allocated by the PSBs for the welfare-related activities (health-related expenses, subsidies on canteen sports and cultural activities, education-related financial assistance etc.) of working and retired officials of PSBs. SWF was given a fillip by increasing the maximum ceiling of annual spending. The ceiling, last revised in 2012, was thoroughly revised after taking into consideration the number of employees and retirees in PSBs as of 2024 and the change in the business mix of the PSBs.  Post revision, the combined maximum annual expenditure ceiling of SWF for all the 12 PSBs has increased from 540 crore to 845 crore. This increase will benefit 15 lakh staff including the retired employees of all the 12 PSBs.

Banking sector asset quality improvement leads to strengthened capital, higher profitability, and expanded financial inclusion. Reforms since 2015 combining transparent NPA recognition, resolution and recovery, recapitalisation and systemic changes have improved PSB asset quality, strengthened capital adequacy, raised aggregate profitability and reduced reliance on government recapitalisation; parallel measures expanded financial inclusion through branch growth and targeted credit schemes and instituted uniform HR policies and enhanced welfare benefits for employees and retirees.