Public Sector Banks post record ₹1.98 lakh crore net profit in FY26
New Delhi: Public Sector Banks (PSBs) recorded their highest-ever aggregate net profit of ₹1.98 lakh crore in the financial year 2025–26, marking the fourth consecutive year of profitability, according to data released by the Finance Ministry on Tuesday.
The strong financial performance was driven by healthy credit growth, improved asset quality, higher recoveries and strengthened capital positions, reflecting continued reforms and enhanced governance practices across PSBs.
The aggregate business of PSBs rose by 12.8 per cent year-on-year to ₹283.3 lakh crore as on March 31, 2026. Aggregate deposits increased by 10.6 per cent to ₹156.3 lakh crore, while gross advances grew by 15.7 per cent to ₹127 lakh crore.
Credit growth remained broad-based across the Retail, Agriculture and MSME (RAM) sectors during FY26. Retail advances registered a growth of 18.1 per cent, agriculture advances increased by 15.5 per cent, while MSME advances rose by 18.2 per cent.
The Finance Ministry said the growth reflected the important role of PSBs in supporting entrepreneurship, strengthening financial inclusion and meeting the credit needs of the economy.
Asset quality of PSBs also improved substantially during the financial year. The Gross Non-Performing Assets (GNPA) ratio declined to 1.93 per cent, while the Net NPA ratio dropped to 0.39 per cent as of March 31, 2026, the lowest levels recorded historically.
The ministry noted that all PSBs maintained provisioning coverage ratios above 90 per cent, indicating prudent provisioning practices, stronger underwriting standards and improved risk management mechanisms.
Fresh slippages continued to decline, with the slippage ratio falling to 0.7 per cent during FY26. Total recoveries, including recoveries from written-off accounts, stood at ₹86,971 crore.
Improved asset quality and steady credit expansion also supported higher profitability. Aggregate operating profit of PSBs reached ₹3.21 lakh crore during FY26, while net profit increased by 11.1 per cent year-on-year to the record ₹1.98 lakh crore.
The capital position of PSBs remained healthy during the year. The aggregate Capital to Risk (Weighted) Assets Ratio (CRAR) improved to 16.6 per cent as on March 31, 2026, well above the regulatory requirement of 11.5 per cent.
According to the ministry, the improved capital position was supported by internal accruals, retained earnings and capital raising worth ₹50,551 crore during the financial year.
Operational efficiency also improved, with the cost-to-income ratio declining to 49.67 per cent, aided by better cost management and gains from technology adoption and digital transformation initiatives.
The Finance Ministry said the continued improvement in PSBs reflects the resilience of the Indian economy and the impact of sustained reforms aimed at strengthening the banking sector through improved governance, technology adoption and enhanced credit discipline.
It added that PSBs are now well-capitalised, profitable and institutionally stronger, enabling them to effectively support India’s growth aspirations and contribute towards the vision of Viksit Bharat by 2047.
(DD News)
