**Executive Summary**
This report details the record-breaking financial performance of Public Sector Banks (PSBs) for the fiscal year ending March 31, 2026. PSBs achieved an all-time high net profit of ₹1.98 lakh crore and historically low NPA ratios, marking the fourth consecutive year of profitability. The document highlights the success of sustained reforms and improved governance in strengthening the banking sector’s resilience and supporting India's economic growth goals for 2047.
**Key Points / Main Content**
**Financial Performance and Growth**
* **Record Profitability:** Aggregate net profit rose by 11.1% year-on-year (y-o-y) to a historic high of ₹1.98 lakh crore.
* **Business Expansion:** Total business reached ₹283.3 lakh crore, reflecting a 12.8% y-o-y growth.
* **Deposit Mobilization:** Aggregate deposits increased by 10.6% y-o-y to reach ₹156.3 lakh crore.
* **Operating Profit:** Aggregate operating profit reached ₹3.21 lakh crore during FY 2025–26.
**Asset Quality and Risk Management**
* **Lowest NPA Ratios:** Gross NPA declined to 1.93% and Net NPA dropped to 0.39% as of March 31, 2026.
* **Improved Recoveries:** Total recoveries, including written-off accounts, stood at ₹86,971 crore.
* **Reduced Slippages:** The slippage ratio reduced to 0.7%, indicating better credit discipline.
* **Provisioning:** Every PSB maintained a provisioning coverage ratio above 90%.
**Credit and Sectoral Lending**
* **Advances Growth:** Gross advances grew by 15.7% y-o-y to ₹127 lakh crore.
* **RAM Segment Growth:** Broad-based credit growth was recorded in Retail (18.1%), Agriculture (15.5%), and MSME (18.2%) segments.
**Capital Adequacy and Efficiency**
* **Strong Capital Position:** The Capital to Risk (Weighted) Assets Ratio (CRAR) improved to 16.6%, significantly above the 11.5% regulatory requirement.
* **Capital Raising:** PSBs raised ₹50,551 crore during the fiscal year, supported by internal accruals and retained earnings.
* **Operational Efficiency:** The cost-to-income ratio improved to 49.67%, driven by digital transformation and technology adoption.
**Impact Analysis**
**Public Sector Banks (PSBs)**
**Impact**
PSBs have achieved healthier balance sheets, enhanced operational resilience, and a strong capital cushion for future lending. Profitability has hit historic highs while stressed assets have reached record lows.
**Action Required**
Maintain prudent provisioning practices, continue technology adoption for cost management, and sustain improved underwriting standards and risk management mechanisms.
**Retail, Agriculture, and MSME (RAM) Sectors**
**Impact**
These segments are the primary beneficiaries of broad-based credit growth, receiving vital support for entrepreneurship and financial inclusion.
**Action Required**
Utilize the increased credit availability from well-capitalized PSBs to support business expansion and contribute to economic growth.
**The Indian Economy**
**Impact**
The banking sector’s stability and enhanced institutional capacity provide a foundation for supporting the credit needs of a fast-growing economy.
**Action Required**
Leverage the strengthened financial position of PSBs to drive the national vision of "Viksit Bharat by 2047" through sustained formal credit access.
Key Entities Referenced
Public Sector Banks (PSBs): The primary group of financial institutions whose record net profits, reduced NPAs, and credit growth are the central subject of this performance report.
Ministry of Finance: The central government ministry overseeing the banking reforms and governance practices that led to the improved financial position of PSBs.
Retail, Agriculture and MSME (RAM) segments: The core lending sectors that registered significant growth, reflecting the banks' role in supporting entrepreneurship and financial inclusion.
Viksit Bharat by 2047: The long-term national vision for a developed India which the strengthened banking sector is intended to support.
Ministry of Finance
Public Sector Banks (PSBs) record an all-time
high net profit of ₹1.98 lakh crore in FY 2025–26,
marking the fourth straight year of profitability
PSBs registered lowest ever NPAs - Asset quality improved
significantly, with the Gross NPA ratio declining to 1.93% and
the Net NPA ratio dropping to 0.39% as of 31 March 2026 —
the lowest levels record historically
PSBs’ total business reached ₹283.3 lakh crore in FY 2025–
26, registering robust y-o-y growth of 12.8%
Gross advances of PSBs grew by 15.7% y-o-y to ₹127 lakh
crore as on 31.03.2026, with strong growth across Retail,
Agriculture and MSME segments
Continued reforms and strengthened governance practices
have reinforced PSBs through healthier balance sheets,
enhanced operational resilience, and strong capital adequacy
Posted On: 12 MAY 2026 2:32PM by PIB Delhi
Public Sector Banks (PSBs) continued to register strong financial performance during FY 2025–26,
reflecting sustained business growth, improved asset quality, record profitability and strong capital
position. The improved performance demonstrates the resilience, stability and enhanced institutional
capacity of PSBs in supporting the credit needs of a fast-growing Indian economy.The aggregate business of PSBs increased to ₹283.3 lakh crore as on 31.03.2026, registering growth of
12.8% over the previous year. Aggregate deposits rose by 10.6% y-o-y to ₹156.3 lakh crore, reflecting
continued depositor confidence and strong resource mobilisation by PSBs. Gross advances registered
growth of 15.7% y-o-y and reached ₹127 lakh crore, indicating sustained credit demand across sectors of
the economy.
Credit growth in the Retail, Agriculture and MSME (RAM) segments remained broad based during FY
2025–26. Retail, Agriculture and MSME advances grew by 18.1%, 15.5% and 18.2%, respectively,
reflecting the important role of PSBs in supporting entrepreneurship, strengthening financial inclusion,
and enabling broad-based economic growth.
Asset quality of PSBs improved significantly during FY 2025–26, with Gross NPA ratio (Non-Performing Assets) declining to
1.93% and Net NPA ratio to 0.39% as on 31.03.2026, reflecting historically low levels of stressed assets. Further, each PSB
maintained provisioning coverage ratio of above 90%, indicating prudent provisioning practices, improved underwriting
standards, effective risk management mechanisms and strengthened balance sheet resilience.
Fresh slippages continued to decline during FY 2025–26, with slippage ratio reducing to 0.7%. Total
recoveries, including recoveries from written-off accounts, stood at ₹86,971 crore, reflecting improved
recovery mechanisms and better credit discipline across PSBs.
Improved asset quality, healthy credit expansion and higher income contributed to improved profitability
of PSBs during FY 2025–26. Aggregate operating profit reached ₹3.21 lakh crore, while aggregate net
profit increased by 11.1% y-o-y to a historic high of ₹1.98 lakh crore, marking the fourth consecutive year
of aggregate profitability for PSBs.
The capital position of PSBs remained healthy, with aggregate CRAR (Capital to Risk (Weighted) Assets
Ratio) improving to 16.6% as on 31.03.2026, supported by internal accruals, retained earnings and capital
raising of ₹50,551 crore during FY 2025–26. The CRAR of all PSBs remained well above the regulatory
requirement of 11.5%, providing adequate cushion for continued lending growth.Operational efficiency of PSBs also improved during the year, with cost-to-income ratio improving to
49.67%, reflecting better cost management and gains from technology adoption and digital transformation
initiatives.
The continued improvement in the performance of PSBs reflects the resilience of the Indian economy and
the Government’s sustained reforms aimed at strengthening the banking sector through improved
governance, technology adoption, enhanced credit discipline and wider access to formal credit. These
measures have contributed to lower stressed assets, improved operational efficiency and stronger financial
position of PSBs.
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.
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