In 2023, with the financial strength of the banking sector increasing, the cases of fraud also increased

AHMEDABAD: The condition of the country's banking sector has improved significantly due to high demand for loans amid strong economic growth. However, it is a matter of concern that fraud cases have also increased. In the first six months of the current financial year, public sector banks have collected around Rs. 68,500 crores and this momentum is expected to continue in the next six months as well.

If this trend continues, the net profit of public sector banks in 2023-24 will be Rs. 1.50 lakh crore, which in the financial year 2022-23 will be Rs. 1.04 lakh crores. It is believed that stability on the non-performing assets (NPA) front, strong credit demand and high interest rate regime will help banks' profitability in the coming months.

The underlying economy has shown a lot of strength, bankers said. When the economy performs well, the banking sector also performs well. The Reserve Bank of India has recently raised India's growth forecast to seven percent from 6.5 percent. Growth in this sector is strong. The demand for loans with the retail segment started a year and a half ago. However, deposit growth has been slower than loan growth and this is a challenge that banks will have to face in the coming months.

Deposits have improved slightly, but are still five percent below loan growth. In the first eight months (April-November) of the current financial year, total deposits in banks have increased by 12.2 per cent, compared to 9.3 per cent in the same period a year ago.

According to the Reserve Bank's latest bulletin, credit growth slowed to 16.4 percent on December 1, 2023 from 17.5 percent a year ago. Slower deposit mobilization will lead to a decline in current accounts and savings accounts (CASAs), limiting the scope for rate cuts. According to analysts, the central bank is unlikely to cut policy rates for at least the next six months.

Demand for housing, cars, education and personal loans will continue to grow in double digits. However, the demand for credit from the rural sector has declined. Despite the strengthening of the banking system's finances, this year also saw several cases of fraud in banks. UCO Bank and Bank of Baroda faced cyber fraud.