Finance Minister to Meet with Public Sector Bank Chiefs Friday to Review Credit Flow to Agriculture, MSME Sectors

Public Sector Banks to Review Financial Performance Amid West Asia Crisis

The finance ministry has called a meeting of heads of public sector banks (PSBs) on Friday to review their financial performance, progress of credit flow to the agriculture sector and MSMEs amid the ongoing West Asia crisis. The meeting, scheduled to be chaired by Financial Services Secretary M Nagaraju, will take place a day ahead of his superannuation.

This review meeting on May 29 with public sector banks will also deliberate upon the operations of regional rural banks and their financial performance, according to sources. Additionally, discussions will take place on AI and digital frauds and progress with regard to the Jan Samarth portal. The meeting will also focus on the recovery mechanism and progress under the DRT and Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act.

Public sector banks (PSBs) have recorded an all-time high net profit of Rs 1.98 lakh crore in 2025-26, marking the fourth straight year of profitability. Improved asset quality, healthy credit expansion, and higher income contributed to improved profitability of PSBs during 2025-26. Aggregate operating profit reached Rs 3.21 lakh crore, while aggregate net profit increased by 11.1 per cent year-on-year to a historic high of Rs 1.98 lakh crore.

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The aggregate business of PSBs increased to Rs 283.3 lakh crore as of March 31, 2026, registering growth of 12.8 per cent over the previous year. Aggregate deposits rose 10.6 per cent to Rs 156.3 lakh crore, reflecting continued depositor confidence and strong resource mobilization by PSBs. Gross advances registered growth of 15.7 per cent to Rs 127 lakh crore, indicating sustained credit demand across sectors of the economy.

Asset quality of PSBs improved significantly during 2025-26, with the gross NPA ratio (non-performing assets) declining to 1.93 per cent and net NPA ratio to 0.39 per cent as of March 31, 2026. Fresh slippages continued to decline during FY26, with the slippage ratio reducing to 0.7 per cent. Total recoveries, including recoveries from written-off accounts, stood at Rs 86,971 crore, reflecting improved recovery mechanisms and better credit discipline across PSBs.