Page 6 - Banking Finance January 2025

BANK UPDATE

vest stakes in Canara Robeco Asset credit scores. The AIBEA also called for banks. SBI alone wrote off Rs 2 lakh
Management Company Ltd and Canara guidelines to handle such situations, crore during this period, followed by
HSBC Life Insurance Company Ltd increased security measures, and sur- Punjab National Bank at Rs 94,702
through initial public offerings (IPOs). veillance cameras in branches. The crore. Despite recent improvements,
The PSU bank plans to reduce its move aims to protect bank employees loan write-offs continue to challenge
shareholding by 13% and 14.5%, re- and ensure a safe working environ- the banking sector.
spectively, in line with the October ment.
2029 timeline set by the government Public Sector Banks' NPAs
to bring its stakes down to 30%. Public Sector Banks Ac- Drop to Record Low of
The move aims to unlock value for count for Half of Rs. 12.3
shareholders, with Canara Bank report- 3.1%
ing strong Q2 results driven by retail Lakh Crore Loan Write-Offs The gross non-performing asset (GNPA)
loan growth, particularly in gold loans. in 10 Years ratio of public sector banks (PSBs) fell
The bank will initiate the IPO process to an all-time low of 3.1% as of Sep-
Indian banks wrote off loans worth Rs
while adhering to SEBI regulations. tember 2024, compared to 14.6% in
12.3 lakh crore between FY15 and
March 2018, according to a govern-
FY24, with public sector banks (PSBs)
AIBEA Seeks Ban on Vio- accounting for 53% or Rs 6.5 lakh crore ment report. The improvement is at-
tributed to the 4R's strategy-recogni-
lent Customers Opening of the total write-offs in the last five tion, resolution, recapitalization, and
years, according to government data
Bank Accounts presented in Parliament. Loan write- reforms.
The All India Bank Employees' Associa- offs peaked at Rs 2.4 lakh crore in FY19 PSBs reported a capital adequacy ra-
tion (AIBEA) has urged the Indian during the asset quality review initi- tio of 15.4% and an aggregate net
Banks' Association (IBA) to blacklist ated in 2015 but declined to Rs 1.7 lakh profit of Rs. 1.4 lakh crore in FY24. Ef-
customers involved in violent or abu- crore in FY24, representing 1% of to- forts to enhance inclusivity have led to
sive behavior towards bank staff. The tal bank credit of Rs 165 lakh crore. 63% of bank branches operating in ru-
union proposed closing their accounts ral and semi-urban areas. Initiatives
As of September 2024, public sector
and barring them from opening new like Mudra and PM-SVANidhi have fur-
banks held gross NPAs of Rs 3.16 lakh
ones for three years. ther boosted MSME lending, with ad-
crore, while private sector banks re-
The demand follows recent incidents ported Rs 1.34 lakh crore. Gross NPAs vances growing at 15% annually.
where customers attacked staff over were 3.01% of outstanding loans for
disputes, including tax deductions and PSBs, compared to 1.86% for private Indian Banks Write Off Rs.
1.7 Trillion in Loans in
IRDAI to Address Overdependence on Bancassurance FY24
Sales Indian banks wrote off Rs. 1.7 trillion

The Insurance Regulatory and Development Authority of India (IRDAI) plans in bad loans in FY24, the lowest in five
to issue regulations to reduce insurers' reliance on parent banks for years, compared to Rs. 2.08 trillion in
bancassurance sales. Some insurers, like HDFC Life and SBI Life, derive over FY23. The write-offs were led by
90% of their sales through this channel, raising concerns about market de- Punjab National Bank (Rs. 18,317
pendency and mis-selling. crore), Union Bank of India (Rs. 18,264

IRDAI encourages diversification through digital and agency channels and crore), and State Bank of India (Rs.
promotes open architecture, allowing distributors to sell products from 16,161 crore).
multiple insurers. Proposed regulations will follow stakeholder consultations The practice of writing off fully provi-
and aim to ensure a balanced and competitive insurance distribution eco- sioned non-performing assets allows
system.
banks to clean their balance sheets

6 | 2025 | JANAURY | BANKING FINANCE