The consolidated balance sheet of scheduled commercial banks in 2022-2023 grew at 12.2 per cent, the highest in nine years, the Reserve Bank of India said in its report released on Wednesday.  The phenomenal growth of scheduled commercial banks is attributed to bank credit growth, which reported its fastest pace of expansion in more than a decade.

The pattern that stood out was the deposit growth. The deposit growth picked up in 2022-2023, although it trailed credit growth, resulting in higher recourse to borrowings. “This was particularly evident in the case of PSBs, for which the deposits to liabilities ratio moderated,” the RBI stated in the report. Similarly, bank credit growth also remained buoyant during 2022-2023 and 2023-2024.  The year-on-year credit growth at the end of November 2023 stood at 16.2 per cent.

“PSBs’ share in incremental credit increased during 2022-23 to reach 46.5 per cent at end-November 2023,” the report mentioned. According to the report, the trend of improvement in the profitability of SCBs, which began in 2019- 20, continued for the fourth consecutive year in 2022-23, aided by higher income and lower provisions and contingencies. Both return on assets (RoA) and return on equities (RoE) improved in 2022-23.

Another silver lining for the banking sector mentioned in the report, during 2022-2023, SCBs strengthened their capital buffers, improved asset quality and maintained sufficient liquid assets. At end-March 2023, there was no bank under the prompt corrective action (PCA) framework as compared to one at end-March 2022.

The report further added that funds raised by banks through private placements of debt, qualified institutional placements and preferential allotments of equity accelerated for the second consecutive year during 2022-23. Although the number of issues by PSBs declined during 2022-23, the total amount raised increased.

On the other hand, international assets of banks in India contracted by 13.1 per cent in 2022-23 as compared with a growth of 9.0 per cent a year ago.

“The fall in assets in 2022- 23 was on account of a reduction in overseas loans and holdings of international debt securities as banks deployed resources to fund domestic credit,” the report said. Consequently, the international assets to liabilities ratio of banks in India reduced at end-March 2023, after increasing for three consecutive years