The banking sector is set to witness significant change. reforms in the coming year with privatization of public sector banks and strategic disinvestment of IDBI Bank on the agenda of the government for 2022.

The emerging coronavirus situation, especially in the wake of the Omicron variant, might pose headwinds in the pace of reforms.

Going by the numbers, the banking sector has done reasonably well in. 2021, notwithstanding the impact of the second wave of the pandemic. Pursuant to the government’s 4Rs strategy of Recognition, Resolution, Recapitalization and Reforms, Non-Per forming Assets (NPAS) of the banking sector have declined to Rs8,35,0511 crore as on March 31, 2021.

As per the Financial Stability Report (FSR) released. by Reserve Bank of India. (RBI) in July 2021, macro stress tests, on the basis of regression modelling, indicate that the Gross Non Performing Asset (GNPA) ratio of Scheduled Commercial Banks, under the baseline scenario, may increase from 7.48 percent. in March 2021 to 9.80 percent by March 2022.

The net profit of Public Sector Banks (PSBS) surged to Rs14,012 crore in the first quarter and further rose to Rs17,132 crore in the second quarter ended September 2021. The combined profit (Rs 31,114) crore) of the first half of the current fiscal is close to the total profit earned (Rs31,820 crore) in the en- tire previous financial year (2020-21).

Similarly, private sector banks including HDFC Bank, ICICI Bank and Kotak Mahindra Bank also posted healthy profit with reduction in bad loans. Improved financial health coupled with new Public Sector Enterprise (PSE) policy have prepared a strong ground for the privatisation of public sector banks, a long pending financial sector reform.

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Many government functionaries have compared the new PSE policy akin to the landmark reforms carried out since 1991.

Unveiling the PSE policy in Budget 2021-22, Finance Minister Nirmala Sitharaman had said that barring four strategic areas, PSEs in other sectors will be divested. The four sectors are atomic energy, space and defence; transport and telecommunications; power, petroleum, coal and other minerals; and banking, insurance and financial services in non-stra tegic sectors.

The banking sector is set to witness significant reforms in the coming year with privatisation of the public. sector banks and the strategic disinvestment of IDBI Bank on the agenda of the government for 2022.

All said, the emerging coronavirus situation, espe- cially in the wake of the Omicron variant, might pose headwinds in the pace of reforms,

Going by the numbers, the banking sector has done reasonably well in 2021, notwithstanding the impact of the second wave of the pandemic. Pursuant to the government’s 4Rs strategy of Recognition, Resolution, Recapitalization and Reforms, Non-Performing Assets (NPAs) of the banking sector have declined to Rs8,35,051 crore as on March 31, 2021.

As per the Financial Stability Report (FSR) released by Reserve Bank of India. (RBI) in July 2021, macro stress tests, on the basis of regression modelling, indicate that the Gross Non- Performing Asset (GNPA) ratio of Scheduled Commercial Banks, under the baseline scenario, may increase from 7.48 per cent in March 2021 to 9.80 percent by March 2022.

The net profit of Public Sector Banks (PSBs) surged to Rs 14,012 crore in the first quarter and further rose to Rs17,132 crore in the second quarter ended September 2021. The combined profit (Rs31,114 crore) of the first half of the current fiscal is close to the total profit earned (Rs31,820 crore) in the entire previous financial year (2020-21). Similarly, private sector banks including HDFC Bank, ICICI Bank and Kotak Mahindra Bank also posted healthy profit with reduction in bad loans. Improved financial health. coupled with new Public Sector Enterprise (PSE) policy have prepared a strong ground for the privatisation of public sector banks, long pending financial sector reform. Many government functionaries have compared the new PSE policy akin to the landmark reforms carried out. since 1991. Unveiling the PSE policy in Budget 2021 22, Finance Minister Nirmala Sitharaman had said that barring four strategic areas, PSES in other sectors will be divested. The four sectors are atomic energy, space and defence; transport and telecommunications; power, petroleum, coal and other minerals; and banking, insurance and financial services in non-strategic sectors.

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