Recently, the Reserve Bank described one government and two private banks as most important for the country’s economy. Also claimed that these banks can never sink. In such a situation, curiosity arises that what is so special that makes these banks the safest banks of the country and why other banks are not able to do so.
New Delhi. The Reserve Bank of India (RBI) has claimed that there are three such banks in the country, which can never sink. The money deposited in these banks remains safe like a fort. This claim of RBI instills confidence among crores of people of the country. It also raises the question that what makes these banks so trustworthy and why other banks are not able to live up to these standards.
Last week, the Reserve Bank of the country included three banks in the category of Domestic Systemically Important Banks (D-SIBs). This means that SBI, ICII and HDFC Bank are the most important banking institutions for the country’s economy. The interesting thing is that the names of one government and two private banks appear in this list.
What is their specialty?
Ashwini Rana, President of the Bank Employees National Organization, says that the asset base of these banks is so strong that they can bear any economic burden. Apart from being among the largest banks of the country, these banks have more assets than loans. Obviously, there is no danger of their sinking under any circumstances, because even if the loan sinks, their functioning will not be affected. The NPA of these banks is also decreasing rapidly and most of the investments have been made in safe options. For this reason the balance sheets of the 3 banks are quite strong.
Banks do not let the risk even come close
Banking expert Hemant AR of Bankbazaar.com says that the bad loans of banks like SBI, HDFC and ICICI are very less. If we talk only about SBI, the share of NPA in its total loans distributed is only 0.67 percent. Banks have achieved considerable growth in their loan recovery. Their financial condition is also very strong.
As per financial year 2022-23, SBI has total assets worth Rs 55,16,979 crore, while the total loan portfolio of the bank is Rs 32,69,242 crore. Total deposits of customers in the bank are Rs 44,23,778 crore. It is clear that this bank has maintained almost twice the assets of the loan disbursed. These banks have no shortage of capital. The risk management of banks is very strong and the process of loan recovery is also increasing.
Safe investment creates confidence
Recently, banks around the world including the US central bank Fed Reserve increased their interest rates. RBI also increased the repo rate six times consecutively to 6.25 percent. In such a situation, SBI changed its investment strategy to provide higher returns to its customers. Despite this, its banks invest most of their capital in safe options only.
Talking about SBI, the investment portfolio has increased by 6.3 percent to Rs 15.87 lakh crore in 2022-23. Out of this, 96 percent investments have been made in domestic options. 62.94 percent of SBI’s investments go in the Held to Maturity (HTM) category. These are such options in which the deposited money has a maturity date. The bank gets 6.51 percent return from these options.
Expansion due to technology
Hemant AR says that these banks have rapidly adopted technological developments. Facilities like video KYC have helped in extending the bank’s services to remote areas. These banks have also recovered their bad loans to a great extent. Due to this, the profits of banks have started increasing. If we look at SBI alone, this bank has made a net profit of Rs 50,232 crore in the last financial year.
Will the government take guarantee if money goes missing?
Bank market expert Hemant AR says that the customers’ money deposited in these banks is quite safe and the risk of their sinking is negligible. As soon as the financial condition of these banks deteriorates, the government intervenes through the Reserve Bank. To keep customers’ money safe, the government also takes guarantee on deposits up to Rs 5 lakh. Under the DICGC scheme, every possible effort is made to keep the depositors’ money safe. Even before they sink, the government has prepared Plan B to rescue them by providing financial assistance.
