PSBs turn profitable in Apr-Sep FY20, post aggregate profit of Rs 3221 cr

State-run lenders had posted aggregate operating profits during 2017-18 and 2018-19 of Rs 1,55,603 crore and Rs 1,53,871 crore respectively

Public sector banks (PSBs) returned to profitability in 2019-20, posting an aggregate profit of Rs 3,221 crore in the first half ending September, Minister of State for Finance Anurag Singh Thakur said in Parliament on Monday.

PSBs had posted huge losses in 2017-18 and 2018-19 financial years due to heavy provisioning for non-performing assets and other contingencies, according to the minister.

State-run lenders had posted aggregate operating profits during 2017-18 and 2018-19 of Rs 1,55,603 crore and Rs 1,53,871 crore respectively.

However, they made aggregate provisions for NPAs and other contingencies of Rs 2,40,973 crore and Rs 2,35,623 crore in FY2018 and FY2019, respectively, he said in a written reply in Lok Sabha.

This resulted in aggregate net losses of Rs 85,370 crore and Rs 81,752 crore in 2017-18 and 2018-19 respectively.

"Further, PSBs have returned to profitability in the current fiscal, reporting an aggregate profit of Rs 3,221 crore in the first half of the current fiscal," Thakur said.

Citing data of the Reserve Bank on global operations of PSBs, he said their aggregate gross advances increased to Rs 68.76 lakh crore as on 31 March 2014 from Rs 25.03 lakh crore as on March end 2008.

As per RBI inputs, the primary reasons for the spurt in stressed assets have been observed to be, aggressive lending practices, wilful default/loan frauds/corruption in some cases, and economic slowdown, the minister said.

He was responding to a question whether the losses in public and private sector banks have been caused by increasing frauds.

The Asset Quality Review (AQR) initiated in 2015 by the RBI for clean and fully provisioned bank balance-sheets revealed high incidence of non-performing assets (NPAs), the minister said.

The RBI has issued various guidelines on safeguards on frauds, misappropriation, embezzlements and defalcation of funds for Urban Cooperative Banks (UCBs), he added.

"Further, a reporting mechanism has also been put in place by RBI, exclusively to monitor frauds reported by UCBs.

"UCBs have also been advised to constitute a special committee on frauds headed by the chairman for monitoring and following up cases of frauds involving amounts of Rs 1 crore and above exclusively, while audit committee of the board is required to monitor all the cases of frauds in general."

He said the government has initiated host of measures to prevent frauds and as per inputs received from PSBs, they impose penalty against erring officials after due process including dismissal/removal from service/compulsory retirement from service among others.

Further, where an element of fraud is observed, complaint is lodged with the police or the Central Bureau of Investigation, he added, citing banks' input.