Indian Banks Earned Rs 1 Lakh Crore Despite Pandemic; HDFC #1 Bank In Profits With 30% Share

In the same year in which at economy was battered by the pandemic and made it stand at the crossroads, the banking sector has recorded its highest ever profits of 1,02,252 crore in FY21.

This is surprisingly a big turnaround, when one compares it to a net loss of nearly 5,000 crore for the industry in FY19.

Half Of Total Profits Made By HDFC & SBI

Of the total profits, half of them were contributed by two banks, HDFC and SBI.

HDFC with 31,116 crore, accounted for 30% of total profits, with an increase of 18% over the previous year. On the other hand, the country’s largest lender SBI accounted for another 20% at 20,410 crore.

With 16,192 crore, ICICI Bank came next to these. Notably, it earned twice as much as it did in the previous year. As public sector banks (PSBs) went slow in lending, the market share of private banks increased.

Reason Behind The Turnaround

One major reason for PSBs to send a 57,832-crore turnaround – from a loss of 26,015 crore to FY20 to a combined profit of 31,817 crore – was the end of their bad credit problem. The burden came to a head after the RBI forced banks to split 12 major payroll accounts, followed by 40 other accounts, such as inactive assets and began a liquidation process. Depending on the size of the disclosure, the move has resulted in a 4 lakh crore loan turning up badly.

Provisions for most of these loans was completed by March 2020 by the banks. From earlier written-off accounts, additional provisions were offset by large recoveries and banks stopped bleeding.