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The public sector banks have turned in a good performance. This has put them under the spotlight and their performance has been well appreciated; but is this good performance sustainable in the long run?
If the recent financial results of the banking sector are any indicators of the health of the economy then there is a lot to cheer about. The financial year 2001-02 has been a good year for the banking industry. Most of the banks have shown a noticeable rise in profit. What is more interesting is that the performance of Public Sector Banks (PSBs), which has seen more than 100 percent increase in their bottomline, has overshadowed that of the private sector. Perhaps this would put them in a better position to go in for the Initial Public Offering (IPO) later this year.
Even banks like Union Bank of India (UBI) and UCO Bank, which had earlier approached the Government for infusion of fresh funds to reduce their accumulated losses, have turned around. UBI posted the highest net profit growth of 579 percent at Rs. 129 crore in 2001-02. Impressed with the performance, the management set a target to wipe off its entire Rs. 1200 crore accumulated loss in the next four to five years. It is also planning to go for an IPO later in the fiscal year. UCO bank also showed an equally impressive performance with net profit growth of 400 percent at Rs. 165 crore.
Of all the banks, Indian Bank's performance stands at the forefront. This bank which was in dire straits and was provided Rs. 1400 crore by the Finance Ministry last fiscal turned up with a profit of Rs. 33.2 crore as against a loss of a whopping Rs. 273.9 crore in the last fiscal year. Debjyothi Ghosh Roy, Director, BDP Consultants, Pune, states, "To a great extent, yes they have got their act together. However, they have miles to go. One should not discount the factor that the public sector had recruited one of the best brains available in 1970s, 1980s, and to some extent in 1990s. They had the resilience to unlearn and relearn. The classic example is that of the State Bank of India, which had recruited one of the best human resources available in the country. Even UBI and UCO bank, who were written-off have resurged".
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