NEW DELHI, Dec 3 : Finance Minister Nirmala Sitharaman on Tuesday said that the public sector banks are safe, stable and healthy and have performed “exceptionally well” in recent years earning Rs 85,520 crore profit in the first six months of the current fiscal.
Replying to a debate on the Banking Laws (Amendment) Bill, 2024, the minister said that all the Public Sector Banks have turned profitable.
The Bill, which amends the Reserve Bank of India Act, 1934, the Banking Regulation Act, 1949, the State Bank of India Act, 1955, the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, and the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980, was later passed by the Lok Sabha by a voice vote.
She further said that total bank branches of scheduled commercial banks have increased by 3,792 in a year to reach 16,55,001 in September 2024. Out of this 85,116 branches are of public sector banks.
Stressing that the Indian banking system is critical to the growth of the nation, Sitharaman said, “Since 2014 we have been extremely cautious so that banks remain stable. The intention is to keep our banks safe, stable, healthy, and after 10 years you are seeing the outcome”.
Banks are being professionally run today, she said, adding the metrics are healthy so they can go to the market and raise bonds, raise loans and run their business accordingly.
“Indian banks have performed exceptionally well in recent years. Highest-ever net profit of Rs 1.41 lakh crore was achieved in 2023-24 & Rs 85,520 Crore in the first half of 2024-25. Today, all the public sector banks have turned profitable. “As a sector, profitability of all scheduled commercial banks is the highest in multiple decades, with the Return on Assets at 1.3 per cent and return on equity at 13.8 per cent,” Sitharaman said.
The minister said the intention of the nationalisation of the banks was to reach the rural areas. In its true sense, that objective was achieved in the last 10 years through the PM Jan Dhan Yojana.
Today, we have Rs 2.37 lakh crore deposited in the PM Jan Dhan Accounts. In 2014, the average balance of the PM Jan Dhan Accounts was Rs 1,065. It has now increased to Rs 4,397.
The Banking Laws (Amendment) Bill, 2024, proposes to allow a bank account holder to have up to four nominees in his/her account.
The bill also seeks to transfer unclaimed dividends, shares, and interest or redemption of bonds to the Investor Education and Protection Fund (IEPF), allowing individuals to claim transfers or refunds from the fund, thus safeguarding investors’ interests.
As the banking sector has evolved over the years and with a view to improving bank governance and investor protection, it has become necessary to make certain amendments to five Acts, according to a statement of Objects and Reasons of the Bill.
“The proposed amendments will strengthen governance in the banking sector and enhance customer convenience with respect to nomination and protection of investors,” Sitharaman said while moving the bill.
The proposed bill seeks to improve governance standards, provide consistency in reporting by banks to the Reserve Bank of India, ensure better protection for depositors and investors, improve audit quality in public sector banks, bring customer convenience in respect of nominations and provide an increase in the tenure of the directors in co-operative banks.
Another proposed change relates to redefining ‘substantial interest’ for directorships, which could increase to Rs 2 crore instead of the current limit of Rs 5 lakh, which was fixed almost six decades ago.
With regard to cooperatives operating in the banking space, Sitharaman said the amendments in the Banking Regulations Act would apply only to cooperative banks or that part of the cooperatives which are operating as banks.
The bill proposes to increase the tenure of directors (excluding the chairman and whole-time director) in cooperative banks from 8 years to 10 years, so as to align with the Constitution (Ninety-Seventh Amendment) Act, 2011.
Once passed, the bill would allow a director of a Central Cooperative Bank to serve on the board of a State Cooperative Bank. (PTI)
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