India's Public Sector Banks Report Record Profit of 1.98 Lakh Crore Amid Historic Low in Non-Performing Assets

Public Sector Banks Report Record Profit in FY 2025-26

Public Sector Banks (PSBs) have reported an all-time high aggregate net profit of Rs 1.98 lakh crore in FY 2025-26, marking the fourth consecutive year of profitability. This achievement is attributed to credit growth, improved asset quality, and higher income.

According to the Ministry of Finance, the aggregate operating profit of PSBs stood at Rs 3.21 lakh crore during the fiscal, while net profit rose by 11.1 per cent year-on-year. The aggregate business of PSBs increased to Rs 283.3 lakh crore as of March 31, 2026, up 12.8 per cent from the previous year.

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Deposits rose 10.6 per cent to Rs 156.3 lakh crore, while gross advances increased 15.7 per cent to Rs 127 lakh crore. Credit growth remained broad-based across retail, agriculture, and MSME segments, with advances in these categories rising 18.1 per cent, 15.5 per cent, and 18.2 per cent, respectively.

Asset quality improved during the year, with the gross non-performing assets (NPA) ratio declining to 1.93 per cent and the net NPA ratio falling to 0.39 per cent as of March-end 2026. The ministry said all PSBs maintained a provisioning coverage ratio of above 90 per cent.

Fresh slippages declined during the year, with the slippage ratio reducing to 0.7 per cent. Total recoveries, including those from written-off accounts, stood at Rs 86,971 crore.

The capital position of PSBs remained stable, with the aggregate capital to risk-weighted assets ratio (CRAR) improving to 16.6 per cent, supported by internal accruals, retained earnings, and capital raising of Rs 50,551 crore during FY26.

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Operational efficiency also improved, with the cost-to-income ratio easing to 49.67 per cent, reflecting gains from cost management and technology adoption. The ministry said the continued improvement in PSB performance reflected reforms undertaken to strengthen the banking sector, including governance improvements, technology adoption, and wider access to formal credit.

The ministry noted that today, PSBs are well-capitalised, profitable, and institutionally stronger, enabling them to effectively support India's growth aspirations and contribute meaningfully towards the vision of Viksit Bharat by 2047.