RBI September-2024 Bulletin(Banks Related):

According to the RBI September 2024 Bulletin, key insights regarding Public Sector Banks (PSBs) and Private Sector Banks (PVBs) highlight their performance in terms of deposit growth and Gross Non-Performing Asset (GNPA) ratios:

Deposit Growth

• Public Sector Banks (PSBs): PSBs reported moderate deposit growth, primarily driven by term deposits with attractive interest rates. However, their growth rate lagged behind that of private banks.
• Private Sector Banks (PVBs): In contrast, private banks experienced higher deposit growth, benefiting from their ability to offer competitive interest rates, particularly in the term deposit segment.

Gross Non-Performing Asset (GNPA) Ratio

• The overall GNPA ratio for banks stood at 2.7% at the end of June 2024, marking the lowest level since March 2011. The annualized slippage ratio, which measures new NPA accretions as a percentage of standard advances, declined to 1.3%. Additionally, the provision coverage ratio (PCR) improved to 76.5% by the same date.
• PSBs: The GNPA ratio for public sector banks improved significantly but remained higher than that of private banks, recorded at 4.4%. In a stressed scenario, this could rise to 5.1%.
• PVBs: Private banks reported a much lower GNPA ratio of 2.1% as of September 2024, with the potential to rise to 3.6% under stress, indicating stronger asset quality management compared to PSBs.

Lending Commitments

PSBs have generally met their target of 18% for agricultural lending. While PVBs historically struggled to meet this target, they have aligned better in recent years. Private banks have also outperformed PSBs in achieving the sub-target of lending 7.5% of their Adjusted Net Bank Credit (ANBC) to micro enterprises. Both PSBs and PVBs have successfully met their targets for lending to weaker sections, with PSBs slightly ahead in this area.

Summary

In summary, while private banks continue to excel in deposit growth and maintaining lower GNPA ratios, public sector banks are gradually making progress, particularly in reducing their bad loans.

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