Series of successful QIP reflect confidence of both domestic and global investors in PSBs and their potential
In addition, 12 PSBs raised funds from Tier I and Tier II bonds taking the total fund mobilisation to ₹58,697 crore
Notwithstanding economic disruptions caused by the pandemic, public sector banks (PSBs) have managed to raise a record ₹58,700 crore from markets in FY2020-21 through a mix of debt and equity to enhance capital base.
This included ₹4,500 crore raised by Mumbai-based Bank of Baroda from qualified institutional placement (QIP). Punjab National Bank mobilised ₹3,788 crore through share sale on private placement basis during the financial year ended March 31, 2021.
At the same time, Bengaluru-based Canara Bank raised ₹2,000 crore from QIP, as per data collated from regulatory filings.
Series of successful QIP reflect confidence of both domestic and global investors in PSBs and their potential, said a senior official of a public sector bank.
In addition, 12 PSBs raised funds from Tier I and Tier II bonds taking the total fund mobilisation to ₹58,697 crore, highest amount garnered in any financial year.
Various reforms undertaken by the government including recognition, resolution and recapitalisation resulted in progressive decline in non-performing assets (NPAs) and subsequent rise in profit.
NPAs of PSBs had declined to ₹7,39,541 crore as on March 31, 2019, ₹6,78,317 crore on March 31, 2020 and further to ₹6,16,616 crore as on March 31, 2021 (provisional data). Provision Coverage Ratio (PCR) at the same time increased sequentially to a high of 84 per cent.
As a result, PSBs in aggregate recorded a profit of ₹31,816 crore, highest in five years, despite 7.3 per cent contraction in economy in 2020-21 due to COVID-19 pandemic.
The primary reason for PSBs to post such a ₹57,832-crore turnaround — from a loss of ₹26,015 crore in 2019-20 to a combined profit of ₹31,816 crore — was the end of their legacy bad loan problem.
At the same time, comprehensive steps were taken to control and to effect recovery in NPAs, which enabled PSBs to recover ₹5,01,479 crore over the last six financial years.
Overall credit growth of Scheduled Commercial Banks (SCBs) has remained positive for 2020-21 despite contraction in GDP (-7.3 per cent) due to the COVID-19 pandemic.
As per the RBI data, gross Loans and Advances of SCBs increased from ₹109.19 lakh crore as of March 31, 2020 to ₹113.99 lakh crore as of March 31, 2021.
Further as per RBI data of loans to agriculture and allied activities, micro, small and medium enterprises, housing and vehicles have witnessed a year-on-year growth of 12.3 per cent, 8.5 per cent, 9.1 per cent and 9.5 per cent respectively during the year.
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