India’s Public Sector Banks (PSBs) recorded their highest-ever aggregate net profit of ₹1.98 lakh crore during FY 2025–26, marking the fourth consecutive year of profitability.
According to data released by the Government of India, the strong performance reflects sustained business growth, improved asset quality, higher operational efficiency and stronger capital positions across public sector banks.
The achievement highlights the growing resilience and stability of PSBs in supporting the credit requirements of the Indian economy.
Strong Growth in Business and Deposits
- The total business of PSBs rose to ₹283.3 lakh crore as of March 31, 2026, registering a year-on-year growth of 12.8%.
- Aggregate deposits increased by 10.6% to ₹156.3 lakh crore, reflecting continued public confidence in public sector banks and strong resource mobilisation.
- Meanwhile, gross advances grew by 15.7% year-on-year to ₹127 lakh crore, indicating robust credit demand across various sectors of the economy.
Retail, Agriculture and MSME Credit Expansion
Credit growth remained broad-based across key segments, particularly:
- Retail loans: Growth of 18.1%
- Agriculture loans: Growth of 15.5%
- MSME loans: Growth of 18.2%
The strong expansion in these segments demonstrates the important role played by PSBs in:
- Promoting entrepreneurship
- Supporting farmers and small businesses
- Strengthening financial inclusion
- Driving inclusive economic growth
Asset Quality Improves to Historic Best Levels
PSBs recorded their best-ever asset quality performance during FY26.
- Gross Non-Performing Asset (GNPA) ratio declined to 1.93%
- Net Non-Performing Asset (NNPA) ratio dropped to 0.39%
These are the lowest NPA levels ever recorded by public sector banks historically.
Additionally, all PSBs maintained a Provisioning Coverage Ratio (PCR) above 90%, reflecting:
- Strong risk management
- Improved underwriting standards
- Better provisioning practices
- Healthier balance sheets
Fresh slippages also reduced significantly, with the slippage ratio declining to 0.7%.
Recovery Performance Strengthens
PSBs reported total recoveries of ₹86,971 crore during FY26, including recoveries from written-off accounts.
The improved recovery performance indicates:
- Better credit discipline
- Stronger recovery mechanisms
- More effective resolution processes
Operating Profit and Capital Position Remain Strong
Aggregate operating profit of PSBs reached ₹3.21 lakh crore during the financial year.
The overall capital position also remained healthy, with the Capital to Risk Weighted Assets Ratio (CRAR) improving to 16.6%, well above the regulatory requirement of 11.5%.
The strong capital base was supported by:
- Internal accruals
- Retained earnings
- Capital raising worth ₹50,551 crore during FY26
Improved Operational Efficiency
Operational efficiency of PSBs continued to improve due to:
- Better cost management
- Technology adoption
- Digital transformation initiatives
The cost-to-income ratio improved to 49.67%, reflecting enhanced efficiency in banking operations.
Impact of Banking Sector Reforms
The government stated that sustained reforms in governance, digital banking, credit discipline and financial management have strengthened public sector banks significantly.
These reforms have helped PSBs become:
- Better capitalised
- More profitable
- Operationally resilient
- Institutionally stronger
The strong performance of PSBs is expected to play an important role in supporting India’s economic growth and contributing towards the vision of Viksit Bharat 2047.