4th straight year of profitability for Public Sector Banks; record all-time high net profit of Rs 1.98 lakh cr in FY26

Public Sector Banks Profit FY26: Public Sector Banks (PSBs) recorded an all-time high net profit of Rs 1.98 lakh crore in the financial year 2025-26, marking the fourth straight year of profitability, the Ministry of Finance said in a release of Tuesday.

In a statement, the ministry stated 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,” it further stated.

The aggregate business of PSBs increased to Rs 283.3 lakh crore as on March 31, 2026, registering growth of 12.8 per cent over the previous year. Aggregate deposits rose by 10.6 per cent YoY to Rs 156.3 lakh crore, reflecting continued depositor confidence and strong resource mobilisation by PSBs, the ministry noted.

Gross advances registered growth of 15.7 per cent YoY and reached Rs 127 lakh crore, indicating sustained credit demand across sectors of the economy, it added.

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 per cent, 15.5 per cent and 18.2 per cent, respectively, reflecting the important role of PSBs in supporting entrepreneurship, strengthening financial inclusion, and enabling broad-based economic growth, the finance ministry stated.

Asset quality of PSBs improved significantly during FY 2025-26, with Gross NPA ratio (Non-Performing Assets) declining to 1.93 per cent and Net NPA ratio to 0.39 per cent as on March 31, 2026, reflecting historically low levels of stressed assets.

Further, each PSB maintained provisioning coverage ratio of above 90 per cent, 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 Rs 86,971 crore, highlighting 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 Rs 3.21 lakh crore, while aggregate net profit increased by 11.1 per cent YoY to a historic high of Rs 1.98 lakh crore, marking the fourth consecutive year of aggregate profitability for PSBs,” the ministry added.

The capital position of PSBs remained healthy, with aggregate CRAR (Capital to Risk (Weighted) Assets Ratio) improving to 16.6 per cent as on March 31, 2026, supported by internal accruals, retained earnings and capital raising of Rs 50,551 crore during FY 2025-26.

The CRAR of all PSBs remained well above the regulatory requirement of 11.5 per cent, providing adequate cushion for continued lending growth, it further said.

Operational efficiency of PSBs also improved during the year, with cost-to-income ratio improving to 49.67 per cent, indicating 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,” the financial ministry said.

“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,” the statement read.