Good Days of Public Sector Banks might be near
With economy showing signs of a recovery and banks actively recovering their slipped assets (Non Performing Assets) it looks like that good days of Public Sector Banks might be near. In the results declared in Quarter 1 (FY 18-19), most banks except IDBI have showed considerable recovery in respect to NPA figures. The Gross and Net NPA of the banks have now began to deplete. Though the banks have shown considerable losses, it was not due to NPA or Provisioning due to increase in NPA.
If NPA are decreasing banks still showed losses?
Most banks except a few have shown losses in the quarter 1 (FY 2018-19). The primary reason for the same was provisioning made for gratuity payment to retired employees. Government has increased gratuity from Rs.10 Lakh to Rs.20 lakh which has dented bank’s bottom line.
Is the situation turning healthy?
Yes in the coming 2-3 quarters banks will start reeling better results with dipping NPA challenges. Most banks have strengthened their position in respect to provision coverage ratio with most reaching healthy level of near 65.
What is Provision Coverage Ratio?
Provisioning Coverage Ratio (PCR): The ratio of provisioning to gross non-performing assets. Indicates the extent of funds a bank has kept aside to cover loan losses.
How it will affect hiring scenario in year 2019 ?
With dipping NPA and increasing provisioning coverage ratio, it is expected that banks will start returning profitable from this year end. With this opinion banks under PCA will be relieved from PCA framework and could restart their expansion initiatives. With many banks like Indian Overseas Bank, Dena Bank and a few more who have been under the framework since 2015, have now started facing acute staff shortage. These banks are expected to gear up hiring from 2019 onward.
Will The Vacancies declared under IBPS 2018 be increased?
This might / might not happen. It directly depends on the economic scenario and when RBI decides to bring banks out of the PCA framework. But one this is clear that good Days for Bank Job Aspirants are near.
