Prime Minister Narendra Modi commended the remarkable achievement of India's banking sector, which has recorded a net profit surpassing Rs 3 lakh crore for the first time ever. Expressing his thoughts on X (formerly Twitter), PM Modi highlighted the sector's impressive transformation over the last decade. "In a remarkable turnaround in the last 10 years, India's banking sector net profit crosses Rs 3 lakh crore for the first time ever", PM Modi wrote. 

"When we came to power, our banks were reeling with losses and high NPAs due to the phone-banking policy of UPA. The doors of the banks were closed for the poor", he added. The Prime Minister stressed the broader implications of this achievement and said, "This improvement in the health of banks will help improve credit availability to our poor, farmers, and MSMEs".

In the fiscal year 2023-24, the banking sector achieved a noteworthy milestone as its net profit crossed Rs 3 lakh crore, indicating substantial progress. The combined net profit of both listed public and private sector banks experienced a remarkable surge of 39%, reaching Rs 3.1 lakh crore, compared to Rs 2.2 lakh crore in the preceding fiscal year.

Allegedly, public sector banks reported a net profit of Rs 1.4 lakh crore, a 34% surge compared to the preceding year. In parallel, private sector banks witnessed a substantial 42% increase in net profit, reaching almost Rs 1.7 lakh crore, compared to Rs 1.2 lakh crore in the previous year. Consequently, the disparity in earnings between the two sectors has expanded.

To put these figures in perspective, the Rs 3 lakh crore net profit is comparable to the total quarterly profits of all listed companies over the first three quarters of the fiscal year. Remarkably, the banking sector's profits have surpassed those of the IT services sector, which has been the most profitable in recent years, with listed IT services companies reporting a net profit of nearly Rs 1.1 lakh crore for FY24.

Public sector banks have substantially reduced their profit deficits compared to private banks through improved balance sheets and enhanced earnings. Over the past three years, their net profit has increased more than fourfold.

It's worth mentioning that the net profits of public sector banks for FY24 could have been even higher if not for a one-time pension provision made by several banks. However, despite this, the shares of these banks saw gains due to lower-than-expected pension provisions. Certain public sector banks, such as Bank of Baroda, encountered additional provisions because of their exposure to Go Air, although these loans are backed by collateral.