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Engines of economic growth: Indian banking sector’s dramatic turnaround – BusinessToday

The Indian banking sector has staged a dramatic turnaround of late. From a loss of about Rs 23,400 crore in FY19, the banking sector turned in a record combined profit of Rs 1.82 lakh crore in FY22. This smart somersault has been accompanied by a cleaning up of its books—gross non-performing assets have almost halved to 5 per cent or so from 2018, and the provisioning coverage ratio has moved up to more than 70 per cent. Under the watchful eye of the Reserve Bank of India, banks are now raring to grow, and grow fast. This clean-up could not have come a day too soon. India is on a growth path despite global headwinds, the government has loosened its purse strings to boost capital expenditure in the hope that private investment will follow, and the infrastructure sector is also witnessing heightened activity.

All this will need banks to be the engines that will power economic growth. But as Anand Adhikari writes in his opening essay, there are challenges they are bound to confront. Already, bank credit growth has shot up to a decadal high of over 17 per cent as against deposit growth of about 9 per cent. Global headwinds, inflation and rising interest rates will mean banks have to tread carefully, even as they step on the accelerator. Against this background comes the 27th edition of the BT-KPMG Best Banks and Fintechs Survey. The latest survey is a reflection of the improved health of the Indian banking and financial system as banks—large, mid-sized and small—demonstrate smart performances. There are 13 categories, and the process is divided into two parts—quantitative (based purely on performance figures) and qualitative (where the figures provide the basis for the jury to decide the winners).

This year, we had a stellar jury chaired by K.V. Kamath, Chairperson of the National Bank for Financing Infrastructure and Development (NaBFID). Other eminent jury members were A.K. Purwar, former chairman of State Bank of India; Alice G. Vaidyan, former chairman & MD of GIC Re; A.P. Hota, former CEO of National Payments Corporation of India; and Avinash Gupta, MD & CEO of Dun & Bradstreet. ICICI Bank emerged as the Bank of the Year for the third year in a row, while HDFC Bank came in as the Best Large Indian Bank. Bank of Maharashtra (Best Mid-sized Indian Bank), Tamilnad Mercantile Bank (Best Small Indian Bank), J.P. Morgan India (Best Large Foreign Bank) and AU Small Finance Bank (Best Small Finance Bank) were among the other winners. The jury unanimously decided to confer the Lifetime Achievement Award to Arundhati Bhattacharya, the former SBI chairman, and also gave a special award for Consistent Transformation to SBI.

That aside, as India counts down to the Narendra Modi government’s last full Budget before the 2024 general elections, Alokesh Bhattacharyya takes a look at what the imperatives before Finance Minister Nirmala Sitharaman will be, as she aims to push the economy forward amid a challenging global environment. Keeping the growth momentum going will be the key objective of Budget 2023-24.

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