Non-performing assets of banks at multi-year low, profits up: Finance Minister

Rajya Sabha passes Banking Regulation Bill amending multiple Acts to address banking sector crisis, improve governance, and protect depositors.

The Rajya Sabha on Wednesday (March 26, 2025) passed the Banking Regulation Bill that amends several provisions of about five Acts in the sector. Terming the Bill unique, Union Finance Minister Nirmala Sitharaman said in her reply that 19 Sections of these Acts would be impacted by the amendments. Ms. Sitharaman said this was part of the measures taken by the NDA government since 2014 to address the crisis in the country’s banking sector.

Ms. Sitharaman said in the statement of objects and reasons of the Bill that the new legislation would 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 for increase in the tenure of the directors in co-operative banks.

“The gross non-performing assets [NPAs] of the scheduled commercial banks were at a multi-year low of 2.5% in September 2024 as a result of these efforts,” Ms. Sitharaman said, adding that public sector banks had recorded highest ever net profit of ₹1.41 lakh crore in the previous financial year. “The government is committed to taking stringent actions against wilful defaulters,” she said replying to the criticism by the Opposition that the Centre allowed such defaulters to escape to foreign countries. She said the Enforcement Directorate was doing the work of recovering the legitimate money belonging to the banks and the people from the defaulters.

On the demand for debt waiver, she said the Narendra Modi government did not believe in deceiving in farmers and the Kisan Samman Nidhi helped the farmers and alleged that the Congress’s announcements of debt waivers had not helped any farmer as they remained as announcements.

She said 68 lakh street vendors had been supported by PM Svanidhi loan scheme. About 50 crore loans had been sanctioned under the PM Mudra scheme under the policy of securing the unsecured and funding the unfunded. The Finance Minister said 98% of the 6,01,328 villages in the country had a bank or a post office with banking facilities. She said in the 10 years 3.9 lakh posts in public sector banks were filled.

Earlier, during the debate, the Opposition members criticised the Centre’s approach towards wilful defaulters. Senior Congress MP Shaktisinh Gohil alleged that the Centre had written off ₹87,000 crore by 50 wilful defaulters till 2024. “People, including Mehul Choksi and Rishi Agarwal are in the list of those wilful defaulters. The government has written off loans to those people who looted this country and fled abroad. But when poor, small traders and farmers default on loans the government auctions their assets,” he said.

Trinamool Congress’s Saket Gokhale said the country’s banks were being crushed under the burden of non-performing assets. “In just the last five years, Indian banks have a staggering ₹10 lakh crore in NPAs,” he said, adding that banks had now been told to write off these NPAs. “These NPAs are taken off the balance sheets of banks, it does not mean they are repaid. It just means that they are taken off to make the balance sheet look healthy...but this money is still not being recovered,” he said.