According to the Parliamentary Questions and Answers data (Lok Sabha) on Outstanding Debt of States and Union Territories (UTs), Canara Bank topped the list of Public Sector Banks (PSBs) with the highest lending of Rs 187,813 crore in FY23 to Corporations and Public Sector Undertakings (PSUs) of States and Union Territories (UTs) for the 5th consecutive time.
- This information was revealed in a written statement by the Union Minister Nirmala Sitharaman, Ministry of Finance, on July 24, 2023, in response to questions raised by Member of Parliament (MP), Velusamy P.
- Out of the 12 PSBs, 10 reduced their lending to PSBs in FY23. Only two banks viz. Canara Bank and Central Bank of India, increased their exposure in FY23.
Highlights of Lending Detail:
i.Canara Bank lending amount of ₹187,813 crore to government-backed entities, alone accounting for over 45% of the total lending of all PSBs in the financial year 2022-2023(FY23).
ii. This lending amount was 11% higher compared to the ₹1,69,532 crore the bank had lent to government entities in the previous financial year (FY22).
iii.Punjab National Bank (PNB) has notified as second highest lender in FY23 with a total loan disbursal of Rs 70,142.5 crore.
iv.State Bank of India (SBI) as 3rd highest lender, lent Rs 66,523.2 crore to State enterprises in FY23, down from Rs 81,735 crore in FY22.
v.PNB and SBI are followed by Bank of India (Rs 25,147 crore), Bank of Baroda (Rs 15,706.8 crore), Union Bank of India (Rs 12,584.8 crore), Bank of Maharashtra ( Rs 10,822.7 crore), Indian Bank (Rs 9,021 crore), Indian Overseas Bank (Rs 7,490 crore), Central Bank of India (Rs 3,949 crore from Rs 1,475 crore in FY22), UCO Bank (Rs 2,939.4 crore), Punjab and Sind Bank (Rs 87.7 crore).
- Punjab & Sind Bank had the lowest exposure to State PSUs and corporations in FY23 as compared to Rs 3,570 crore in FY22.
Key Points:
i.The total lending by 12 PSBs to government entities fell to Rs 4.12-lakh crore (Rs 4.12 trillion) in FY23 from 4.93-lakh crore in FY22.
- This lending is declined about 20% year-on-year (y-o-y) in FY23 on the back of continuous growth for four years.
ii.It was Rs 2.51 trillion in FY19, Rs 3.11 trillion in FY20, and Rs 3.98 trillion in FY21.
iii.In FY23, the Public Sector Banks (PSBs) achieved a record aggregate net profit of Rs 1.04 trillion.
iv.PM SVANidhi scheme, aimed at supporting COVID-affected street vendors to restart their businesses, as of July 20, 2023, amounting to Rs 6,482 crore, have been disbursed to 38.5 lakh street vendors.
V.As of July 17, 2023, the National Asset Reconstruction Company Ltd (NARCL) has acquired three borrower entities, namely Jaypee Infratech Ltd, SSA International Ltd, and Helios Photo Voltaic Ltd, with a combined debt exposure of Rs 21,349 crore.
vi.In the last five financial years, the government and the Reserve Bank of India (RBI) have implemented extensive actions to recover bad debts amid which scheduled commercial banks have managed to recover a substantial amount of Rs 7.16 trillion (provisional data for FY 2022-23).
- The nationalized banks have not disbursed loans to State governments in the last five years.
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Tamil Nadu has highest Outstanding Debt in India
As per the RBI’s ‘State finances: A study of budgets of 2022-23’ report published in 2023, Union Minister of Finance Nirmala Sitharaman shared data on outstanding liabilities, highlighting that Tamil Nadu(TN) has the highest amount of outstanding debt among all States and Union Territories in India, at Rs 7.54-lakh crore (as per budget estimates for FY23).
- TN is followed by Uttar Pradesh (UP) at 7.10-lakh crore outstanding debt.
- Odisha is the only state in the country to reduce its debt consistently over the past three years: 1.8% in 2019-20, 8.4% in 2020-21, and 12% in FY 2022-23.
Key Points:
i.TN has consistently been the highest market borrower in the last three years which is done through issue of bonds under State Development Loans (SDLs).
- According to RBI data, TN’s gross market borrowings through SDLs stood at Rs 87,000 crore in FY23 and FY22 after raising Rs 87,977 crore in FY21.
iii.As per 2023-24 budget, TN government plans to borrow a total amount of Rs 1.43-lakh crore in 2023-24 and make repayments of Rs 51,331.79 crore.
iv.The outstanding liabilities of Maharashtra, measured in terms of Gross State Domestic Product (GSDP), stood at Rs 6.80-lakh crore as per budget estimates for FY23.
- It was followed by West Bengal (Rs 6.08-lakh crore), Rajasthan (Rs 5.37-lakh crore) and Karnataka (Rs 5.35-lakh crore).
v.The UT of Puducherry had the lowest outstanding debt of Rs 11,651 crore.
Recent Related News:
i.According to the Reserve Bank of India’s (RBI) Monetary Policy Report (April 2023), credit growth continued to outpace deposit growth in financial year 2022-23 (FY23) at an eleven-year high, despite banks fully transmitting lending rates linked to external benchmarks [250 basis points (bps)], which now account for nearly half of floating-rate loans.
ii.According to the Reserve Bank of India (RBI) data, India’s Bank credit increased by 15% year-on-year (YoY) in the Financial year 2022-23 (FY23), against 9.6% YoY in 2021-22 (FY22).
About Ministry of Finance:
Union Minister– Nirmala Sitharaman (RajyaSabha- Karnataka)
Ministers of State (MoS)– Pankaj Chaudhary; Dr. Bhagwat Kishanrao Karad
Departments– Department of Expenditure; Department of Economic Affairs (DEA); Department of Revenue; Department of Financial Services; Department of Investment and Public Asset Management (DIPAM) & Department of Public Enterprises.
