The Finance Ministry on Tuesday informed the Rajya Sabha that, post-merger, the profitability of public sector banks (PSBs) has improved. It also said that growth in Currency in Circulation (CiC) decelerated sharply in November.

In a written reply, Minister of State in the Finance Ministry, Pankaj Chaudhary, said that as per Reserve Bank of India (RBI) data, the profitability of the PSBs that have amalgamated/merged during the last five years has improved on a consolidated basis. For example, State Bank of India (SBI), in which five associate banks of SBI and Bharatiya Mahila Bank merged with effect from April 1, 2017, recorded a profit of over ₹20,000 crore in FY 2020-21 as against a loss of over ₹1,300 crore in FY 2016-17

Similarly, Bank of Baroda, in which Vijaya Bank and Dena Bank were amalgamated w.e.f. April 1, 2019, improved from a loss of ₹8,339.27 crore in FY 2018-19 to a profit of ₹828.96 crore in FY 2020-21. Punjab National Bank, in which Oriental Bank of Commerce and United Bank of India were amalgamated w.e.f. April 1, 2020, improved from a loss of ₹8,310.93 crore in FY 2019-20 to a profit of ₹2,021.62 crore in FY 2020-21.

He also mentioned that the government has proposed the privatisation of two PSBs. However, “decision by the cabinet committee/cabinet has not been taken in this regard,” he said.

Cash in circulation

In response to another question, Chaudhary said that the year-on-year growth in CiC has decelerated sharply to 7.9 per cent in November as against 22 per cent in the corresponding month of last year. He explained that demand for currency depends upon several macro-economic factors, including economic growth, the level of interest rate, and the precautionary demand generated by the public during FY 2020-21 due to pandemic-induced uncertainties.

“Combination of greater public demand for cash and contraction in GDP has led to an increase in CiC as a percentage of GDP to 12 per cent and 14.5 per cent in FY 2019-20 and 2020-21, respectively,” he said.

Gold smuggling

Replying to a question on gold smuggling, he said that being a clandestine activity, the quantity of gold smuggled into the country cannot be accurately estimated. However, “Customs field formations and Directorate of Revenue Intelligence have seized 3,626.85 kg during 2019-20, 1,944.392 kg during 2020-21 and 1,717.396 kg during 2021-22 (till November),” he said.