India’s Public Sector Banks (PSBs) recorded an all-time high net profit of ₹1.98 lakh crore in FY 2025-26, marking their fourth consecutive year of aggregate profitability, according to a statement by the Ministry of Finance on Tuesday, 12 May.
The ministry said the performance reflected sustained business growth, improved asset quality, stronger profitability and a healthy capital position across Public Sector Banks.
Aggregate operating profit of Public Sector Banks reached ₹3.21 lakh crore during the year, while aggregate net profit rose by 11.1% year-on-year to ₹1.98 lakh crore.
Total business of Public Sector Banks increased to ₹283.3 lakh crore as on 31 March 2026, registering year-on-year growth of 12.8%.
Aggregate deposits rose by 10.6% year-on-year to ₹156.3 lakh crore, reflecting continued depositor confidence and resource mobilisation by Public Sector Banks.
Gross advances increased by 15.7% year-on-year to ₹127 lakh crore, indicating sustained credit demand across sectors of the economy.
Credit growth remained broad based across Retail, Agriculture and MSME segments during FY 2025-26.
Retail advances grew by 18.1%, agriculture advances by 15.5% and MSME advances by 18.2% during the year.
The ministry said this reflected the role of Public Sector Banks in supporting entrepreneurship, financial inclusion and broad-based economic growth.
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Asset quality improved significantly during FY 2025-26, with the Gross Non-Performing Assets ratio declining to 1.93% and the Net Non-Performing Assets ratio falling to 0.39% as on 31 March 2026.
According to the ministry, these were historically low levels of stressed assets for Public Sector Banks.
Each Public Sector Bank maintained a provisioning coverage ratio of above 90%, indicating stronger provisioning practices, improved underwriting standards and better risk management.
Fresh slippages also declined during the year, with the slippage ratio reducing to 0.7%.
Total recoveries, including recoveries from written-off accounts, stood at ₹86,971 crore during FY 2025-26.
The capital position of Public Sector Banks also remained healthy.
Aggregate Capital to Risk Weighted Assets Ratio improved to 16.6% as on 31 March 2026.
The ministry said the capital position was supported by internal accruals, retained earnings and capital raising of ₹50,551 crore during FY 2025-26.
The Capital to Risk Weighted Assets Ratio of all Public Sector Banks remained above the regulatory requirement of 11.5%, providing a cushion for continued lending growth.
Operational efficiency also improved during the year, with the cost-to-income ratio improving to 49.67%.
The ministry attributed the improvement to better cost management, technology adoption and digital transformation initiatives.
It added that 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,” the ministry said.
